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The U.S. economy grew 2.3% last year, the Commerce Department said Thursday. That’s a slowdown from the previous year, when the economy grew 2.9%. And it’s well short of the 3% growth target set by the White House.

In the fourth quarter, the economy grew at an annual rate of 2.1%, matching the pace of the previous three months. The Congressional Budget Office is projecting GDP growth of 2.2% this year.

“We anticipate that consumer spending, spurred by rising wages and household wealth will remain strong,” CBO director Phillip Swagel told a House committee on Wednesday. “We also expect business investment to rebound as several of the factors that weighed on businesses last year abate.”

Swagel’s forecasts for the rest of the decade are less rosy, with annual GDP growth slumping to an average of just 1.7%.

“That growth rate is lower than the historical average because of long-term demographic trends,” Swagel said. “The United States is an aging society. That means the growth of our labor force will be slower in the future than it has been in the past.”

The Trump administration has tried to lure more people into the workforce with a combination of carrots and sticks. The carrots include tax cuts that increase take-home pay. The sticks include work requirements and other adjustments to safety-net programs such as food stamps.

A strong job market has drawn more people off the sidelines into the workforce. Labor force participation has climbed from a low of 62.4% in 2015 to 63.2% today, although rates in the U.S. still lag those in other countries.

“I think we’ve learned quite a lot of good things about the labor market,” Federal Reserve chairman Jerome Powell said Wednesday. “Good things suggesting that there’s been more room to run.”

Powell said newly-signed trade pacts with China, Canada and Mexico could give businesses more confidence to invest in the new year. Lackluster business spending was a drag on growth for much of 2019. However, Powell cautioned that uncertainty surrounding trade policy has not gone away.

“There’s a bit of a wait and see attitude,” the Fed chairman said.


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