USA economic growth slows slightly in third quarter; outlook less upbeat

Soybeans are offloaded from a combine as a farmer harvests crops in Indiana

"The effects of expansionary fiscal policy also showed up in government spending, which shot up 3.3% in the third quarter, the strongest sequential rate of growth in more than two years". While President Trump hailed the headline figure of 3.5% growth in GDP, there were serious signs of weakness in the quarterly report.

The economy grew at a robust 3.5 percent in the three months that just ended, the Commerce Department reported Friday-a slowdown from the breakneck pace earlier in the year but one that indicates a solid rate of economic expansion.

The report stated that the increase in real gross domestic product in the third quarter reflected positive contributions from personal consumption expenditures and private inventory investment, state, along with local government spending, federal government spending, and nonresidential fixed investment. The American economy looks like it will expand above a 3% rate in 2018.

Soybean exports fell sharply, weighing on growth, according the Commerce Department.

With the unemployment rate at its lowest mark since 1969, the Fed has been raising interest rates to prevent annual inflation from taking off. Prices now are rising at an annual rate of 2 percent, according to the Fed's preferred gauge.

Bloomberg's US chief economist Carl Riccadonna said following the report that, "The composition of growth in the third quarter has some important implications". Exports spiked in the second quarter because producers were trying to sell their products before the Trump administration's new tariffs - on goods like steel and electronics from China and other countries - kicked in.

This is published unedited from the PTI feed.

More news: Quinnipiac poll releases new numbers on Cruz-O’Rourke race

For this year, economists are projecting the momentum built up should result in growth of 3 per cent, the best annual showing in 13 years.

Government spending continues to fuel growth, especially on defense, which grew 4.5%. By buying more, the importers seem to have anticipated, in July and August the second round of tariffs on chinese goods imposed in September. The second quarter's pace of growth was the best in four years.

"Given the fiscal stimulus, it's going to take a lot to derail this economy and I don't think that's going to happen anytime soon", said Ryan Sweet, senior economist at Moody's Analytics. Shares of Caterpillar Inc., an economic bellwether, tumbled this week after the maker of mining and construction equipment said manufacturing costs were higher due to rising material and freight costs.

Consumer spending compared with projections for a 3.3% advance and followed the second quarter's 3.8% gain. Well, not always, because having GDP growth above potential GDP typically leads to higher prices, also known as inflation.

The Fed raised rates in September for the third time this year and removed a reference to monetary policy remaining "accommodative" from its policy statement. In addition, the stock market turmoil is seen reducing household wealth.

Within that category, spending on structures shrank 7.9%, the biggest drop in nearly three years, after a 14.5% surge in the prior period that partly reflected investment in oil production.

GDP growth last quarter benefited from a rebuilding of inventories, which dragged down expansion in the prior period amid tariff-related supply chain disruptions and steady demand.

Related News:



Most liked

Japan, India leaders agree to step up defense, economic ties
In comments to the media, Modi said, "Without the cooperation of India and Japan, 21st century can not be a century of Asia". The leaders of Japan and India are reaffirming their ties amid growing worries about trade and regional stability.

Cleveland Browns fire Hue Jackson
Dorsey doesn't have reason to worry about that scenario anymore, however, as Haley also was sacked Monday afternoon. The franchise fired Jackson and offensive coordinator Todd Haley in a decision announced early Monday afternoon.

Trump to visit Pittsburgh against the wishes of many Pittsburghers
They said his words voicing concern over the mailed packages "ring hollow" in light of other statements Trump has made.

Difficult Merkel ally says step-down is a shame
Annegret Kramp-Karrenbauer, secretary general of the CDU, is seen October 21 in Berlin during the election campaign. Her announcement not to run for party chair again in December shows how serious the situation is.

Meghan Markle reconnects with her feminism roots - Nairobi
They will head into the bush in the Abel Tasman National Park for a walk with one of the park's rangers to learn about the forest. For that man or woman who has watched on television, you are proving that it's OK to talk about how we feel.

Anthony Scaramucci Tells Donald Trump: 'Dial Down The Lying'
Pop singer Madonna told the Women's March past year that she had "thought an very bad lot about blowing up the White House". With two more bombs being found this morning, the country looked to the White House for a response.

China blasts Trump phone hack report as ‘fake news’
As for President Trump, he reacted just as everyone expected by going to Twitter and calling the NYT report "soooo wrong".

Israel hits Gaza, targets Hamas in rocket strikes
At least 213 Palestinians have been killed by Israeli fire in Gaza since the protests began, according to figures collated by AFP. Widespread desperation among Gaza's 2 million residents has fueled the participation in the Hamas-orchestrated protests.

Japan's Abe Heads to China Vowing to Lift Ties to ‘New Level’
The incident prompted anti-Japanese riots in China, and kicked off a frosty spell that has only recently begun to thaw. China is now the world's second largest economy and Japan the third.

Seven hours, 18 innings
LOS ANGELES-The Los Angeles Dodgers and Boston Red Sox played a lot of baseball in Game 3 of the World Series . The throw got away from Hernandez as Nunez crossed first base and fell over, again, in pain.

More suspicious packages found as investigators search for sender
Trump said there are dramatic differences between the two political parties; the ruling Republican and the opposition Democratic. Packages sent to all but Biden are in manila envelopes with bubble wrap interior, the Federal Bureau of Investigation said.

Erdogan demands punishment for all behind 'planned Khashoggi murder'
President Recep Tayyip Erdogan said Friday that the Saudi official will meet Turkish prosecutors during his visit. Rouhani said in remarks to his Cabinet in Tehran, according to Iran's Fars News Agency.

Sri Lanka president suspends parliament amid political crisis
Sirisena proceeded on Friday despite the insistence of many political observers that he lacked the power to remove the premier. His regime refused to acknowledge war-era abuses, and bitter divisions between minority Tamils and majority Sinhalese persist.

Jamal Khashoggi’s killing was ‘extrajudicial execution’ - United Nations expert
U.S. senators have urged WWE to rethink its relationship with the Saudis. "The US is deeply engaged in this war". Meanwhile, Khashoggi's eldest son has left Saudi Arabia , a source close to the family told CNN.

Google Search Gets Quick Access Controls for Privacy, Ads Settings, Activity Controls
Realizing this is too complicated for most users, Google says it'll expand this new approach to Maps and other Google products. Google says it's rolling out the new feature on mobile and desktop today; if you don't see it yet, it should show up soon.