U.S. Gross domestic product – the broadest measure of the US economy – is growing faster than expected in the third quarter, but is slowing slightly as business investment continues to decline
The Commerce Department said Wednesday that economic activity is growing year on year a 1.9% rate in the third quarter, slightly down from the 2% rate in the second quarter. Economists surveyed by Dow Jones expected a first look at economic growth in the third quarter to reach 1.6%.
Better-than-expected data were the result of continued consumer spending as well as government spending, the agency said. Consumer spending, a measure of spending on American households, is up 2.9% annually, while government spending is up 2%.
However, gross private investment growth continued to decline in the three months ended September 30, down 1.5%, still far better than the decline of 6.3% in the second quarter. In particular, business expenses were weighed on the number of investments, as structural costs continued to decline by 15.3%. Equipment consumption was down 3.8%.
"For manufacturers, the biggest challenge remains finding skilled labor and commercial insecurity, which makes it difficult to hire and expand business operations," says Chad Mutrey, chief economist at the National Association of Manufacturers.
Housing investments maintained the losses in check, recovering up to 5.1% from a negative 3% in the previous quarter.
Imports, which is a subtraction in the calculation of GDP, increased in the third quarter. The latest US trade deficit report shows an imbalance of $ 54.9 billion at the end of August, as imports outpace exports in the last full month of summer.
The slight slowdown in economic growth comes as trade uncertainty and production fears delay the juice investment in private business in the United States.
The White House's aggressive trade tactics, especially the fight against tariffs with China and China, caused a dramatic mood of business, with executives expressing concern in surveys and earnings calls.
Consumption, which represents more than two-thirds of economic activity, continued to show sustainability in the third quarter as one of the few bright spots for growth.
2.9% consumption growth in the third quarter, however, marked a slowdown of 4.6% in the second quarter. Fears of a global economic downturn, coupled with a slowdown in production, seem to have hit recent retail sales in September, suggesting US households may begin to curb their spending habits.
The Department of Commerce said earlier this month retail sales fell 0.3% in September as households cut spending on construction materials, online purchases and mostly cars. The decline is the first since February.
The new GDP figure may also have implications for Federal Reserve politicians, who will conclude their two-day political meeting in Washington on Wednesday.
Employees of the Federal Open Market Committee express concern. on potential delays, and cut interest rates twice in 2019. The Fed is expected to announce another quarter-point reduction on Wednesday afternoon.
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