Published: Mon, October 29, 2018
Markets | By Erika Turner

US Economy Grew At 3.5% Rate in Third Quarter

US Economy Grew At 3.5% Rate in Third Quarter

In addition, at an worldwide seminar on China's macroeconomic performance jointly organized by the three organizers, 56 percent of 110 domestic economists forecasted China's economic growth will be between 6.5 percent and 6.6 percent; almost half of the economists said the private investment growth will be from 8 percent to 9.9 percent and more than 66 percent of the economists predicted the exchange rate of the yuan to the U.S. dollar between at 6.85 to 7.412.

Compared to the third quarter of 2017, the economy grew 3%, the best performance since the second quarter of 2015, keeping it on track to hit the Trump administration's 3% growth target this year.

Gross domestic product - the value of all goods and services produced in the US - grew at a seasonally and inflation-adjusted annual rate of 3.5% from July through September, the Commerce Department said Friday.

The second GDP estimate for the third quarter (July-September) is scheduled to be released on November 28. "And, of course, recent reductions in personal income tax rates are also a tailwind for the economy", Clarida said.

Third quarter GDP topped expectations and shows the USA economy continues to grow at a strong rate.

Growth in consumer spending, which accounts for more than two-thirds of United States economic activity, increased at a 4% rate in the third quarter. However, since that time exports of soybeans have dropped each month which increased the trade deficit. Friday's GDP report provides more support for this thesis, with government spending rising more than 3 percent in the quarter. Analysts had forecast this turn-around, saying it reflected the surge in exports of goods such as soybeans in the spring as producers tried to beat the higher tariffs being imposed by China in retaliation for Trump's tariffs.

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This is published unedited from the PTI feed.

"While business spendings vary substantially quarter over quarter, the slow down came earlier than expected by many economists as a sign of the fading impact of corporate tax cuts and fiscal stimulus", he said. Robust consumer spending " Trade policy may also have driven the big swings in net exports and inventories", said Michael Feroli, an economist at JPMorgan in NY.

Wall Street closed sharply lower but markets were less moved by the GDP data than by disappointing earnings. Borrowing costs also may keep rising, as investors project the Federal Reserve will raise the benchmark interest rate for a fourth time this year in December. Excluding food and energy, the central bank's preferred price index also rose at a 1.6% rate.

Moreover, the export growth is expected to be at between 8.72 percent and 9.08 percent, and the figure will reach between 9.08 percent and 10.02 percent in 2019, as well as, the import growth at between 16.99 percent and 17.13 percent in 2018, and it will decline to between 14.04 percent and 14.88 percent in 2019. "Specifically, overall fixed investment spending contracted 0.3%".

"The stock market is going to go up and down", he said. "Even if those paychecks aren't growing as fast as we might like, that's going to fuel economic growth and in this report, in fact, the strongest sector was consumer spending". "Plus the lowest unemployment rate in 49 years!" Investment spending in new residences has now fallen for three quarters (nine months) in a row and the decline seems to be picking up.

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