US maintains solid growth in Q3
washington — The US economy unexpectedly maintained a brisk pace of growth in the third quarter as an increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction.
Gross domestic product increased at a 3.0 per cent annual rate in the July-September period after expanding at a 3.1 per cent pace in the second quarter, the Commerce Department said on Friday.
The department said while it was impossible to estimate the overall impact of hurricanes Harvey and Irma on third-quarter GDP, preliminary estimates showed that the backto-back storms had caused losses of $121.0 billion in privately owned fixed assets and $10.4 billion in government-owned fixed assets.
Harvey and Irma struck parts of Texas and Florida in late August and early September. Hurricane Maria, which destroyed infrastructure in Puerto Rico and the Virgin Islands, had no impact on thirdquarter GDP growth as the islands are not included in the United State’s national accounts. Economists polled by Reuters had forecast the economy growing at a 2.5 per cent pace in the third quarter. Excluding inventory investment, the economy grew at a 2.3 per cent rate, slowing from the second quarter’s 2.9 per cent pace.
With post-hurricane labour market, retail sales and industrial production data already showing an acceleration in underlying economic activity, Friday’s report will probably have no impact on monetary policy in the near term. Federal Reserve Chair Janet Yellen cautioned last month that economic growth in the third quarter “will be held down” by the severe disruptions caused by the hurricanes.
The US central bank is expected to increase interest rates for a third time this year in December.
Businesses accumulated inventories at a $35.8 billion pace in the third quarter in anticipation of strong demand. As a result, inventory investment contributed 0.73 percentage point to third-quarter GDP growth, after adding just over a tenth of a percentage point to growth in the prior period.
Exports increased at a 2.3 per cent rate in the third quarter, while imports fell at a 0.8 per cent pace. That left a smaller trade deficit, leading to trade adding 0.41 percentage point to GDP growth. Trade has contributed to output for three quarters in a row.
Growth in consumer spending, which accounts for more than twothirds of the US economy, slowed to a 2.4 per cent rate following a robust 3.3 per cent pace in the second quarter. —