US economy is looking durable despite risks

A series of government reports Wednesday cast a picture of a steadily growing U.S. economy, fueled by solid consumer spending and defying threats — at least for now — from a U.S.-China trade war and a global slowdown.

The Commerce Department estimated that the economy grew at a moderate 2.1% annual rate over the summer, slightly better than it had previously estimated. Other reports showed stronger consumer spending and a rebound in orders for big-ticket manufactured goods.

For the July-September quarter, the rise in the gross domestic product, the economy’s total output of goods and services, exceeded the government’s initial estimate a month ago of a 1.9% annual rate. A key reason is that businesses didn’t cut back on investment spending as much as first estimated.

The economy had begun the year with a sizzling 3.1% GDP rate, fueled largely by the now faded effects of tax cuts and increased government spending.

Many analysts worry that GDP growth is slipping in the current October-December quarter to a 1.4% annual rate or less as business investment weakens further. But most say the slowdown won’t likely be as severe as it might have been because consumers, who drive about 70 percent of the economy, are signaling that they will likely keep spending through the holiday shopping season and into next year. That spending is being supported by rising incomes and an unemployment rate

that is near the lowest levels in a half century.

Consumer spending gained some momentum entering the final three months of the year, with spending rising by a 0.3% annual rate in October, the fastest monthly pace in three months.

And in the U.S. manufacturing sector, which has been struggling with global economic weakness and damage from the Trump administration’s trade conflicts, orders for high-cost items rebounded in October by a 0.6% annual rate after having declined in September.

Economists said the flurry of reports depict an economy that is regaining its footing after absorbing threats this year, from the global slowdown to the intensifying trade war with China, which has perpetuated uncertainties for businesses. Many companies have suspended plans to expand and invest.

Still, the stock market has set record highs on optimism that at least a preliminary U.S.-China trade agreement can be reached soon.

“We still expect GDP growth to slow a little further over the coming months, but the latest data suggest that the slowdown in the fourth quarter won’t be quite as bad as we had previously feared,” analysts at Capital Economics said in a note Wednesday.

The GDP report showed that business investment fell at a 2.7% annual rate in the July-September period, the second consecutive decline. Yet that drop was offset by a solid 2.9% gain in consumer spending.