US economic growth cooled in the fourth quarter to a 3.1 percent annualized rate, the weakest in nearly two years, as the massive trade deficit weighed on the economy, government figures showed on Friday.
For all of last year, GDP grew 4.4 percent, the fastest since 1999, the Commerce Department said.
Still, the fourth-quarter figure, the lowest since the first quarter of 2003, was well below the estimate of most Wall Street economists, who had called for a 3.5 percent expansion pace, with the heavy US trade deficit limiting growth.
GDP, the output of all goods and services, totaled US$11.7 trillion last year.
The report was the first, or advance, estimate of GDP in the quarter, with revisions to be made over the next two months. It showed consumer spending and business investment contributed the biggest shares to growth. Despite a weaker US dollar, international trade dragged down GDP.
Exports of US-made goods and services declined by 3.9 percent, the biggest drop in two years. Meanwhile, imports increased 9.1 percent. The net trade balance subtracted 1.7 percentage points from growth, the largest drag in more than six years.
"In effect, it means the US is still the locomotive of growth in the global economy," said Nariman Behravesh, chief economist at the research firm Global Insight.
"It's really alarming in the sense is that while the US continues to chug along, we haven't made any progress in terms of rebalancing growth in the global economy," he said.
Moodys Investors Service chief economist John Lonksi said the report does raise warning flags.
"The contraction of exports brings attention to the still sluggish rates of growth both in eurozone and Japan," he said.
In the fourth quarter, consumer spending increased at a 4.6 percent annual rate, down from 5.1 percent in the third quarter. Spending on durable goods increased 6.7 percent, down sharply from 17.2 percent in the third quarter.
Inflation rates increased slightly but remained within the Federal Reserve's target zone. The personal consumption expenditure price deflator -- one measure of inflation -- increased 2.5 percent in the fourth quarter, with a core inflation rate of 1.6 percent. The core rate is up 1.6 percent in the past year, the highest inflation rate in two years.
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