WASHINGTON–The U.S. economy slowed in the third quarter as CUToday.info previously reported, but revised data indicate the pace of growth will likely remain strong enough to hit the 3% target set by the Trump Administration for this year.
According to the second estimate of third quarter growth provided by the Commerce Department, gross domestic product increased at a 3.5% annualized rate, a figure unchanged from its estimate in October. That pace is down from the 4.2% growth record in Q2.
During the third quarter, businesses accumulated inventory at a faster pace and spent more on equipment than initially indicated, but that activity was offset by downward revisions to consumer spending and exports.
According to a Reuters analysis, growth is being driven by the White House's $1.5-trillion tax cut package, which has “given consumer spending a jolt and bolstered business investment.”
The Commerce Department also said after-tax corporate profits increased at a 3.3% rate last quarter after rising at a 2.1% pace in the second quarter.
The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, according to CNBC, increased at a 3.8% rate in the July-September period, up from a 2.5% growth pace in the second quarter.
“But dark clouds are gathering over the economic expansion that is now in its ninth year and the second longest on record,” said CNBC in its analysis. “Business spending on equipment appears to have weakened early in the fourth quarter and higher interest rates are slowing demand for housing.”
In his review of the revised data, NAFCU’s chief economist, Curt Long, said, “Despite downward revisions to auto related purchases, consumer spending remained strong overall and is expected to lead growth in the fourth quarter. Early reports indicate robust retail sales between Thanksgiving and Cyber Monday. Business spending on structures and equipment were higher than initially thought. Nevertheless, third quarter nonresidential investment growth was still the slowest in nearly two years, in part due to growing trade concerns. Oil prices have also slumped lately, which could affect future investment in the energy sector. Overall, the economy remains on solid footing, but headwinds are increasing.”