US economy increased by 3.5% interest rate in the third quarter

But Signaling Disadvantage of it emerging prospects, the shares fell on Friday, with Dow Jones Industrial Average Return 1[ads1].19% and Standard & Poor's 500-Share Index fell 1.73%.

Operating profit for the third quarter has been largely positive, with around 80% of reporting S & P 500 companies are adding profits that exceeded Wall Street's expectations. But sales performance has been more mixed, with over a third of companies having so far missed revenue. It is a trend that reinforces some investor's concern that US economic growth may have peaked earlier this year.

Consumer spending is driven by many jobs. Unemployment fell in September to its lowest level since 1969, which means more income in households' pocketbooks, and tax cuts have added purchasing power. This was reflected in the report in the form of additional expenses on everything from restaurants to leisure items.

"I'm 75, and this is one of the best times I've seen for a long time," said Thomas Thompson, a retired Plymouth, Wis power plant engineer. He and his wife bought a new Cadillac Escalade SUV this summer and recently began a two-week vacation to Washington, DC, and the Blue Ridge Mountains, partly thanks to the strong economy and stock market gains in recent years.

Government spending is also released on the economy after signing in earlier in the expansion due to agreements between the Democratic Obama administration and Congressional Republicans to restore budget deficits that increased after 2007-2009 financial crisis.

Defense spending grew to 4.6% annual rate in the third quarter, adjusted for inflation, partly thanks to a two-part budget agreement reached in February to increase government spending this year and next with nearly $ 300 billion across borders set in a 2011 law. It contained $ 165 billion more for the military. For six months between April and September, defense spending has increased at its fastest pace since 2009.

Despite growth engines, many analysts believe that the expansion will slow in the coming months. The Federal Reserve, for example, projects a growth of 2.5% in 2019, 2% by 2020 and 1.8% by 2021.

The GDP report pointed to unexpected weakness pockets, especially in business. Corporate investment increased by a modest 0.8% annual interest rate. This meant a contraction in investment in business structures, which had been strong for several months, thanks to expenses for oil and gas companies driven by rising energy prices.

Republicans reduced corporate tax rates from 35% to 21%, hoping to spur a business investment boom that boosts the economy's potential to grow for years. Corporate investment data may be volatile from quarter to another, but the weak figure in the latest report suggests other factors, including uncertainty about the outlook for trading rates. It may start to weigh on business decisions about using new equipment and facilities.

The Trump Administration has levied $ 250 billion of customs duties on goods imported from China. It has also set tariffs in sectors such as steel and solar panels, and US trading partners have been retaliated.

The recreational craft industry which is subject to retribution charges varies from approx. 10% to 25% on exports to a number of countries. It is an example of a sector caught in the crossroads.

Correct Craft Inc., a pleasure craft based in Orlando, FL, "is being pushed at both ends," said Bill Yeargin, CEO, in an interview. In addition to export prices that constitute "significant headwinds" in its international business, tariffs on components imported from China have given the domestic suppliers coverage to raise prices, he said.

"Fortunately, the domestic market has been very strong," Mr

Doug Smoker, Managing Director of New Paris, Ind., Boatmaker Smoker Craft Inc., echoed that "the tariffs definitely charge a fee on us."

"We're a little nervous" about rising component costs, "says Mr. Smoker, adding that he is" hoping the economy will be in the same situation as now, and we will not be affected by political unrest and continue to roll. "

President Trump has decided to close to major US trade deficits, but an increasing trade deficit was a move on growth in the third quarter. Earlier this year, trade increased growth as farmers increased sales of soya beans to get ahead of expected tariffs on US exports to China.

Sensors that are sensitive to interest rates also have a burden when Fed increases short-term prices. Housing construction has signed a contract in five of the last six quarters. The pace of car purchases has also slowed over the past three months.

Fed is expected to increase short-term interest rates again in December and then through 2019. It is intended to prevent the economy from overheating and stirring up inflation or economic profits that can lead to bubbles in property prices. The rate increases has triggered anger from Mr. Trump, who says that the central bank undermines its efforts to promote growth.

The stock market is another wild card for the economy. Rising stock prices produce something economists call a "wealth effect", which means that when people see their investment portfolios rising, they spend more money because they feel richer.

The value effect probably led to increased consumer spending as stock prices rose, but could weigh on expenses if inventories continue to fall as they have in recent weeks.

The latest report on the economy included a hint that the Fed may not need to push prices significantly higher, which can help stocks. Central Bank's preferred inflation measurement – a price index that tracks the cost of goods and services purchased by consumers – increased by 1.6% annual rate in the third quarter, less than Fed's 2% target.

Fed officials believe inflation will continue to increase because the economy is going strong, but if price measures remain modest, officials can decide that they do not have to push prices significantly higher.

A Fed report released earlier this week says the business was still optimistic about the job of the economy, but expressed concern that the tariffs will continue to increase costs.

Many businesses have gone along tariff-related price increases to customers, or expect Fed to say in its latest edition of anecdotal information on regional economic conditions known as beige book. But in some cases companies can not cope.

Corrections and Enhancements
Final sales to private domestic buyers eliminating trade, inventories and public spending rose to a seasonally adjusted annual rate of 3.1% in the third quarter. An earlier version of this article wrongly called "final sales of domestic product" and gave a rate of 1.4%. 26 October 2018 )

Write to Harriet Torry at harriet.torry@wsj.com