The U.S. economy expanded at a solid 3.5% annual rate in the July-September quarter, led by lower but still strong consumer spending and more business investment than previously estimated.
The Commerce Department’s figure for gross domestic product, released this morning, was the same as its initial estimate last month. GDP is the broadest measure of the nation’s output of goods and services and covers everything from homebuilding to haircuts. Greater corporate investment offset downward revisions in spending by state and local governments and consumers.
The third quarter figure follows a robust expansion of 4.2% in the April-June quarter. Six months of healthy growth have put the U.S. economy on track to expand in 2018 at its fastest pace in 13 years. Still, economists forecast that growth will slow in the fourth quarter and decelerate further next year.
Borrowing costs are headed higher as the Federal Reserve raises short-term interest rates. That has lifted mortgage rates and weighed on home and auto sales. The Trump administration’s trade fights have also raised uncertainty for many companies and may cause them to delay investments. And the boost to consumer spending from last year’s tax cuts is likely to fade by next year.
Economists at JPMorgan Chase forecast that growth will slow to 2.5% in the fourth quarter and 2.2% in the first three months of 2019.
