The U.S. gross domestic product – the broadest target for the US economy – grew faster than expected in the third quarter, but declined slightly as business investment continued to decline.
The Commerce Department said Wednesday that economic activity grew at an annual rate of 1.9% in the third quarter, down from the 2% pace in the second quarter. Economists polled by Dow Jones had expected that the first moment of economic growth in the third quarter would come in at 1.6%.
The better data than expected was the result of continued consumer spending and government spending, the department said. Personal consumption expenditure, a measure of consumption by US households, increased at an annual rate of 2.9%, while the government spent 2%.
in the three months ended September 30, down 1.5%, still far better than the 6.3% drop in the second quarter. In particular, business expenses outweighed the number of investments as structural expenditure continued to decline by 15.3%. The pace of use of equipment fell 3.8%.
"For manufacturers, the biggest challenge is still finding skilled labor and trade insecurities, which makes it difficult to hire and expand business operations," said Chad Moutray, chief economist at the National Association of Manufacturers.
Housing investment kept losses at bay, but fell back to 5.1% growth from negative 3% in the previous quarter.
Imports, which is a subtraction of GDP, increased during the third quarter. The latest US trade deficit report showed an imbalance of $ 54.9 billion at the end of August as imports surpassed exports in the last full month of summer.
The slight slowdown in economic growth comes as trade uncertainty and fears of an industry slowdown in private business investment in the United States.
The White House's aggressive trading tactics, especially the back-and-forth tariff fight with China, have been a drag on business sentiment, with executives expressing concern in surveys and revenue.
Consumption, which accounts for more than two-thirds of economic activity, continued to show resilience in the third quarter as one of the few bright spots for growth.
The growth of 2.9% in consumption in the third quarter, however, marks a deceleration from the pace in the second quarter of 4.6%. Fears of a global downturn weighing on the US economy, combined with the slowdown in manufacturing, appeared to hit recent retail sales in September, suggesting that US households could begin to curb consumer habits.
The Commerce Department said earlier this month that retail sales fell 0.3% in September as households cut spending on construction products, online purchases and especially cars. The decline was the first since February.
The new GDP figure could also have consequences for Federal Reserve politicians, who will end their two-day political meeting in Washington on Wednesday.
Federal Open Market Committee officials have expressed concern about a potential slowdown and have cut interest rates twice in 2019. The Fed is often expected to announce a further quarterly cut Wednesday afternoon.
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