ZCZC
BCN-40
US-ECONOMY-GROWTH-GDP LEAD
US growth still strong 3.5% in July-Sept, despite slower spending
WASHINGTON, Nov 28, 2018 (BSS/AFP) – A jump in US government spending and
business investment in the July-September period held economic growth at a
solid 3.5 percent rate, despite a slowdown in consumer spending, the
government reported Wednesday.
Adding to the strong 4.2 percent growth pace in the second quarter, the US
GDP report confirms President Donald Trump’s tax cuts have helped businesses
but it also contains signs of slowing auto and home purchases.
Despite the headwinds from Trump’s trade wars, the Commerce Department
report showed third quarter GDP growth was unchanged from the initial
estimate released last month. Analysts expected the figure to be revised
upward slightly.
That made for the strongest six-month period since mid-2014.
But rising interest rates and even labor shortages are beginning to bite in
the housing market. The report showed spending on homes fell 2.6 percent in
the quarter, although that was a much smaller decline than originally
reported.
And consumer spending increased by a smaller amount than estimated in last
month’s report, primarily due to lower spending on cars and trucks, the
Commerce Department said.
Despite the robust growth, the data shows the trade war with China and
other countries continue to be a drag on the US economy and hundreds of
billions in goods are subject to punitive tariffs.
Exports fell 4.4 percent in the quarter, a full point more than the initial
estimate, but imports climbed 9.2 percent.
However, those downward revisions were offset by big improvements in
business and federal government spending.
After initially showing a decline, business fixed investment — spending on
structures and equipment — rose 1.4 percent in the quarter.
And federal defense spending was higher than initially reported, even as
state and local spending was much smaller.
BSS/AFP/SR/2000 HRS