The US economy slowed less than expected in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years, keeping growth on track to hit the Trump administration’s three per cent target this year.
Gross domestic product increased at a 3.5 per cent annualised rate also supported by a surge in inventory investment and solid government spending, the Commerce Department said on Friday (Oct 26) in its first estimate of third-quarter GDP growth.
While that was a slowdown from a 4.2 per cent pace in the second quarter, it still exceeded the economy’s growth potential, which economists put at about two per cent. But there were red flags to the economic expansion that is now in its ninth year and the second longest on record.
Business spending stalled and residential investment declined for a third straight quarter, signs that the boost from a US$1.5 trillion tax cut was fading and higher interest rates were hurting the housing market.
“There will come a day of reckoning for the economy after the tax cut monies are all gone, but for today Washington really has something to crow about,” said Chris Rupkey, chief economist at MUFG in New York.
Channel NewsAsia
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