Can U.S. economy stay hot?
The U.S. economy is running hot. Growth clocked in at an annual pace of 3.5 percent in July-September, atop a 4.2 percent April-June expansion. Together the two periods mark the fastest consecutive quarters of growth since
2014. Credit consumers: Their spending accounted for 77 percent of third-quarter growth. Their confidence is the highest in 18 years.
But economists see yellow lights ahead. Growth has fed off tax cuts signed last December. But the deficit-financed stimulus likely will start to burn out next year. Meantime, the Federal Reserve has hiked interest rates three times this year and is expected raise them again in December. Gradually, higher rates should weigh on the economy. Indeed, President Donald Trump is already complaining about them. Trump’s trade policies — import taxes on U.S. trading partners that have drawn retaliation on American exports — also are causing some businesses to delay investments. The trade hostilities and higher borrowing costs contributed to a tumbling stock market in October and to sluggish 0.8 percent third-quarter growth in business investment, reversing strong growth the first half of 2018.