Slows Slightly During Third Quarter

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In addition, at an global 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 United States dollar between at 6.85 to 7.412.

Housing remained a weak spot in the economy, posing the third consecutive drag on GDP growth, with a contraction of 4 percent. In the second quarter of 2018, real GDP increased 4.2 per cent, the Bureau of Economic Analysis said.

Growth in consumer spending, which accounts for more than two-thirds of USA economic activity, is expected to have been strong in the third quarter after a 3.8 percent increase in the second quarter.

"The big swings in trade and inventories between the second and third quarters are likely at least partially due to changes in activity associated with trade policy", said Daniel Silver, an economist at JPMorgan in NY.

"The president's actions from deregulation to tax reform have supercharged the American economy, driving it to new heights", he said in a statement.

Growth in consumer spending, which accounts for more than two-thirds of USA economic activity, increased at a 4% rate in the third quarter.

This was met with real consumer spending growing at a 4 percent annual rate in the third quarter, compared to 2.6 percent during the prior four quarters.

Friday's report beat expectations, as Wall Street economists expected this report to show the economy grew at an annualized rate of 3.3% during the third three-month block of the year.

The housing sector was a drag on growth for the third quarter in a row.

This is published unedited from the PTI feed.

Solid third-quarter growth is expected to keep the Federal Reserve on course to raise interest rates again in December, despite a recent tightening in financial market conditions brought about by a stock market sell-off and a rise in US Treasury yields.

The Congressional Budget Office points to several reasons for that: the expiration of personal income tax cuts, slower growth in federal spending, and higher interest rates and prices.

Companies also built up inventories in a rush to import goods before they were subject to tariffs.

"In the big picture, what we're trying to ascertain is: is fiscal stimulus transitory or will it help sustain economic growth longer term?" The report was one of the last major economic indicators before Election Day (there will be one more jobs report released November 2).

More broadly, the International Monetary Fund earlier this month cut its global growth forecast for the first time in two years, blaming escalating trade tensions and stresses in emerging markets.

The central bank has raised rates three times this year and signalled it will raise rates one more time this year and expect to raise rates three times in 2019. Well, not always, because having GDP growth above potential GDP typically leads to higher prices, also known as inflation.

"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. That was the most since the second quarter of 1985 and reversed the 1.22 percentage point contribution in the April-June period.

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