US growth un­re­vised in Q3; head­winds in­creas­ing

The Gulf Today - Business - - FRONT PAGE -

WASH­ING­TON: The US econ­omy slowed in the third quar­ter as pre­vi­ously re­ported, but the pace was likely strong enough to keep growth on track to hit the Trump ad­min­is­tra­tion’s 3 per cent tar­get this year, even as mo­men­tum ap­pears to have mod­er­ated fur­ther early in the fourth quar­ter.

Gross do­mes­tic prod­uct in­creased at a 3.5 per cent an­nu­al­ized rate, the Com­merce De­part­ment said on Wed­nes­day in its sec­ond es­ti­mate of third-quar­ter GDP growth. That was un­changed from its es­ti­mate in Oc­to­ber and well above the econ­omy’s growth po­ten­tial, which economists es­ti­mate to be about 2 per cent.

The econ­omy grew at a 4.2 per cent pace in the sec­ond quar­ter. While busi­nesses ac­cu­mu­lated in­ven­tory at a faster pace and spent more on equip­ment than ini­tially thought in the third quar­ter, that was off­set by down­ward re­vi­sions to con­sumer spend­ing and ex­ports.

Growth is be­ing driven by the White House’s $1.5 tril­lion tax cut pack­age, which has given con­sumer spend­ing a jolt and sup­ported busi­ness in­vest­ment. The fis­cal stim­u­lus is part of mea­sures adopted by Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion to boost an­nual growth to 3 per cent on a sus­tain­able ba­sis.

The gov­ern­ment also re­ported on Wed­nes­day that af­ter-tax cor­po­rate prof­its in­creased at a 3.3 per cent rate last quar­ter af­ter ris­ing at a 2.1 per cent pace in the sec­ond quar­ter.

An al­ter­na­tive mea­sure of eco­nomic growth, gross do­mes­tic in­come (GDI), in­creased at a rate of 4.0 per cent in the third quar­ter, quick­en­ing from the sec­ond quar­ter’s 0.9 per cent pace.

The av­er­age of GDP and GDI, also re­ferred to as gross do­mes­tic out­put and con­sid­ered a bet­ter mea­sure of eco­nomic ac­tiv­ity, in­creased at a 3.8 per cent rate in the July-sep­tem­ber pe­riod, up from a 2.5 per cent growth pace in the sec­ond quar­ter.

But dark clouds are gath­er­ing over the eco­nomic ex­pan­sion that is now in its ninth year and the sec­ond long­est on record. The goods trade deficit widened fur­ther in Oc­to­ber, pres­sured by de­clin­ing ex­ports of soy­beans, cap­i­tal goods and au­to­mo­biles, the Com­merce De­part­ment said in an­other re­port on Wed­nes­day.

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