GDP misses, despite a surge in healthcare spending

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GDP fell short of expectations once again.

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(Phil Cole/Getty Images)
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Gross domestic product has fallen short of expectations once again.

The second print for US GDP growth in the fourth quarter of 2016 came in at a 1.9% annualized rate, according to the Bureau of Economic Analysis.

Economists expected the measure of the US economy to increase to 2.1%, but it did not budge from the initial print of 1.9% growth that was released in January.

Personal consumption grew by 3.0%, up from the first print of 2.5%.

Most of the personal-consumption growth came from medical care, according to Neil Dutta, the head of US economic research at Renaissance Macro.

"Real consumer spending was revised up 0.5ppt to 3.0% led by stronger spending on household services," Dutta said in a note following the release. "However, the growth was almost entirely in medical care services. This upward revision was good for a 0.7ppt contribution to GDP, up 0.5ppt from the initial estimate."

"So, while private domestic demand was revised up, we would hardly call the news good considering most of the revision was in one category, medical care," he concluded.

The initial reading for the fourth quarter was a dramatic slowdown from the 3.5% growth in the third quarter, but that was partly because of the impact of soybean exports on the data.

The final release for the fourth quarter data will come March 30.