WASHINGTON (MarketWatch) — The economy bogged down at the end of 2015, raising questions about whether U.S. growth is losing momentum.

Gross domestic product — the value of everything a nation produces — expanded at a 0.7% annual rate from October to December. That’s a big markdown from 2% growth in the fall and 3.9% last spring.

The economy expanded at a 2.4% clip last year, the same as in 2014, the Commerce Department said. The U.S. hasn’t topped 3% growth since 2005.

Softer consumer spending, falling exports and a smaller buildup in business inventories were largely the cause of the fourth-quarter slowdown, fresh government data showed. Inflation waned again.

The poor GDP report comes at a delicate time. U.S. stock markets have suffered big losses early in the new year and key segments of the economy such as manufacturing, energy and retailing are weak.

The dimmer landscape has even raised questions about whether the Federal Reserve was right to raise interest rates in December for the first time in almost 10 years — a move taken because the central bank viewed the economy as much improved.

In many ways the economy does seem healthier.

The number of new jobs created in the fourth quarter, for example, was the strongest of the year. The housing market continues to gain momentum. And consumers are more confident and better off financially now than they’ve been in years.

Also read: Behind the puzzle of why companies aren’t firing

The big question as the first quarter nears the halfway point is which view of the economy is right. The Fed is betting on a quick rebound, saying earlier this week that it expects the U.S. to “expand at a moderate pace.”

If so, the U.S. economy will have to buck recent history. Growth in the first quarter has been much slower than the rest of the year since the nation exited recession in mid-2009.

One reason: unusually bad winter weather in recent years. And the eastern half of the U.S. just got socked by a huge snowstorm that kept millions of Americans indoors for days.

Inside the GDP report

The amount of money spent by consumers increased at a 2.2% annual pace in the final three months of 2015, down from 3% in the prior quarter. That was the biggest reason for the dropoff in GDP.

Americans cut back on buying new cars and other big-ticket items. It wasn’t all bad news, though. Unseasonably warm weather reduced utility bills. Households also didn’t have to spend as much on food or gas because of falling prices.

Inflation as measured by the PCE index slowed to a 0.1% annual rate from 1.3% in the third quarter — well below the Fed’s 2% target. The central bank expects inflation to remain low in the near term but eventually start to rise as the effect of lower oil prices fade.

The nation’s trade balance, meanwhile, deteriorated again and weighed on GDP.

Exports fell 2.5% as a strong dollar and weaker growth in many foreign countries dented sales of American-supplied goods and services. Imports rose 1.1%.

Businesses, for their part, hunkered down at the end of 2015. Spending on equipment fell 5.3% to mark the third drop in the past four quarters. Outlays on structures also slid 1.8%, reflecting deep cuts in spending by energy producers struggling to cope with cheap oil.

Warehouse restocking also tapered off. The value of inventories rose $68.6 billion vs. an $85.5 billion advance in the third quarter.

There was some good news. Home construction outlays jumped 8.1%, reflecting a pickup in building amid a steady rise in sales. More people can afford to buy homes after the biggest surge in hiring since the late 1990s.

The strong pace of job creation explains why most economists think U.S. growth will snap back soon.

Despite the tepid GDP report card, consumers have sharply increased spending over the past few years. Spending in 2015, for example, was the strongest in a decade.

Most industries are also still looking to hire in the face of rising demand for their goods and services. Job openings are near a record high.

“The economy’s foundation looks decent and the fourth-quarter weakness is likely to fade as inventories swing back, the hit to oil investment slows and consumption gets a bit of a lift from strong employment and low inflation,” economists at BNP Paribas wrote in a report.

Unless the labor market suddenly deteriorates, economists contend, the U.S. should have enough momentum to skid through the latest soft patch. Repeated ups and downs has become a hallmark of a recovery — the weakest since World War II — that began 6½ years ago.

The erratic nature of the recovery, however, also appears to have generated plenty of angst among large swaths of the public. Many voters are considering populist presidential candidates such as Donald Trump on the right and Bernie Sanders on the left who would have stood low odds of success in the era before the Great Recession.