Economic activity in the U.S. continued to increase in the final three months of 2014, according to a report released by the Commerce Department on Friday, although the pace of growth slowed by more than economists had expected.
The report said U.S. gross domestic product climbed by 2.6 percent in the fourth quarter following the 5.0 percent jump seen in the third quarter.
Economists' consensus estimate had called for GDP to increase by a somewhat more substantial 3.2 percent during the quarter.
Trade was a big drag in the fourth quarter, reflecting a notable deceleration in export growth and an upturn in imports, which are a subtraction in the calculation of GDP.
The report said exports rose by 2.8 percent in the fourth quarter after climbing 4.5 percent in the third quarter, while imports jumped 8.9 percent in the fourth quarter after dipping 0.9 percent in the previous quarter.
The Commerce Department said the slowdown in the pace of GDP growth also reflected a downturn in federal government spending and a deceleration in non-residential fixed investment.
On the other hand, the report showed an acceleration in the pace of consumer spending, which increased by 4.3 percent in the fourth quarter after rising by 3.2 percent in the third quarter.
Reflecting the recent drop in gas prices as well as signs of strength in the labor market, the consumer spending growth in the fourth quarter was the strongest since the first quarter of 2006.
Paul Ashworth, Senior U.S. Economist at Capital Economics, noted that the jump in GDP in the third quarter included a "suspicious looking" 16.0 percent spike in national defense spending, which was followed by a 12.5 percent drop in the fourth quarter.
"Without that spike, which we're pretty sure is just due to poor seasonal adjustment, third-quarter GDP growth would have been 4.3% and fourth-quarter growth would have been 3.2%," Ashworth said. "This is a more accurate gauge of the 'slowdown' in the pace of growth."
On the inflation front, the Commerce Department said its reading on core consumer prices, which exclude food and energy prices, rose by 1.1 percent in the fourth quarter compared to a 1.4 percent increase in the third quarter.
The report also showed that GDP growth for 2014 accelerated to 2.4 percent from 2.2 percent in 2013, reflecting the fastest growth since 2010.
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