US Economy Grows 3.0 Percent In Third Quarter

GDP hits 3%, crushing estimates

The US economy maintained a strong pace of growth in Q-3, as an increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction. Federal Reserve Chair Janet Yellen cautioned last month that economic growth in the third quarter "will be held down" by the severe disruptions caused by the hurricanes. Unemployment is at a 16-year low.

North expects the USA economy to stay on track unless an unexpected shock happens, "like an incident with North Korea". However, asset prices, including real estate prices, can swing sharply, perhaps because of rising inflation and interest rates. Trade has contributed to output for three quarters in a row. It was the strongest two-quarter showing since 2014.

"Despite the damage from this year's hurricane season, the US economy grew at 3 percent for the second quarter in a row", stated White House Press Secretary Sarah Sanders in a press release.

The skepticism about Trump's 3 percent was somewhat justified. The administration was quick to hail the GDP report as evidence that Trump's economic program was already helping to lift the economy.

The Commerce Department report is sure to be cited by the Trump administration as an indication its pro-business policies are wielding results. "And as the president's tax cut plan is implemented our entire economy will continue to come roaring back". Growth from April through June was 3.1%.

"We're in full swing, let the good times roll", said Moody's Chief Economist Mark Zandi in a forebodingly positive statement. Many analysts believe annual growth in the current October-December quarter will amount to a rate of around 2.7 percent. It appears likely that the 2017 growth will end the year higher than that.

Hassett said the plan to slash the corporate tax rate from 35 percent to 20 percent could increase the size of the US economy by $700 billion, to $1.2 trillion over a decade.

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Harvey made initial landfall in Texas on August 25, and Irma blitzed Florida on September 10.

Private economists have estimated that the storms sapped between one-half and 1 percentage point from annual growth in the July-September period. Outside of the areas directly affected by the hurricanes, there are a few signs of weakness. Because of this, inventory investment influenced a 0.73 percentage point to the third-quarter GDP growth.

In the third quarter, consumer spending declined to 2.4 percent from a brisk 3.3 percent in the second quarter. The rise was driven by equipment spending, which grew 8.6 percent, while spending on intellectual property products grew 4.3 percent. Government investment fell for a third straight quarter. Economists polled by Reuters had forecast the economy growing at a 2.5 per cent pace in the third quarter.

The third quarter gross domestic product rose at a 3.0 percent annual rate after increasing 3.1 percent pace in the second quarter, according to the Commerce Department.

The U.S. can expect sustained growth in the aftermath of the Hurricanes as consumers and businesses spend to rebuild.

This is the second consecutive quarter that the leading indicator of economic strength, the GDP, met President Trump's goal. But the number was revised upward again, to 3.1 percent.

U.S. Travel said that numerous hurricane-related job losses were due to employees being off payrolls or otherwise unable to work during the storms because they had evacuated or because their establishments were not open for business due to power failures and other effects of the hurricanes.

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