GDP for quarter grows at 1.9% rate

WASHINGTON >> The U.S. economy slowed to a modest growth rate of 1.9% in the summer as consumer spending downshifted and businesses continued to trim their investments in response to trade war uncertainty and a weakening global economy.

The Commerce Department reported Wednesday that the July-September performance for the gross domestic product, the economy’s total output of goods and services, was just below the 2% rate of growth in the second quarter .

Economists had been forecasting a much bigger slowdown with fears GDP could slump to 1.4% or less given a number of headwinds.

Still, the GDP gain was far below the 3%-plus increases that President Donald Trump has set as a benchmark to demonstrate that his policies are succeeding in lifting the economy above the modest 2.2% growth of the Obama years.

Consumer spending, which accounts for 70% of economic activity, grew at a solid 2.9% rate in the third quarter, but it was still a slowdown after a 4.6% surge in the second quarter.

There were signs the trade battle and weak global growth were taking a toll as businesses cut back on their investment spending for a second straight quarter in the face of rising uncertainty. Business investment in structures plunged at a 15.3% rate in the third quarter after a sharp 11.1% drop in the second quarter.

Residential investment, which had been falling for six quarters, finally saw an increase, rising at a 5.1% rate, a gain that reflected the impact lower mortgage rates from the Federal Reserve’s rate cuts were having on sales and construction plans.

Government spending slowed to a growth rate of 2%, down from a 4.8% gain in the second quarter.