US economic growth cools more than forecast

US gross domestic product (GDP), the broadest measure of goods and services produced across the economy, grew at a 2.6% annual rate in the fourth quarter, the Commerce Department said on Friday.

Economists had expected GDP to grow by a seasonally adjusted 3.2%.

The US economy grew 5% in the third quarter and 4.6% in the second quarter after declining in the first three months of the year.

Meanwhile, consumer spending, which is a main source of economic activity, grew 4.3% following a 3.2% increase in the third quarter, registering its biggest rise since the first three months of 2006.

However, slower business and government spending and higher imports impacted growth and the personal consumption expenditures index, one the Fed's preferred inflation gauge, fell at a 0.5% annual rate in the October-to-December period, compared to a 1.2% increase in the third quarter.

The decline represents the biggest drop since the first three months of 2009.

“The economy is also showing more signs of lopsided growth, being too reliant on the consumer," said Chris Williamson, chief economist at Markit.