U.S. Economy Sees 3.5% Growth in Third Quarter
The U.S. economy had another strong growth quarter, recording a 3.5% increase in gross domestic product (GDP) during the third quarter. Although this might not be as impressive as the 4.2% growth in Q2, it did come in a bit higher than observer estimates and continues to put President Trump on track to reach his 3% annual growth goal for 2018. As CNN Business reports, this also marks the sixth consecutive quarter where growth exceeded 2%.
There are a few reasons why the third quarter results took a dip from the previous quarter. For one, business investment took off earlier in the year thanks to the GOP-backed tax reform bill. Additionally many exporters rushed to beat various deadlines before tariffs went into effect in China and elsewhere. As a result, net exports were down in Q3.
Elsewhere disposable personal income during the quarter increased by 2.5%. However consumer spending well outpaced that, growing 4%. This caused Bank of the West chief economist Scott Anderson some concern, first noting, “Four percent growth is a phenomenal performance,” before adding, “We don’t think that’s sustainable. We think spending is getting a little ahead of incomes. Some of those interest-rate sensitive spending categories are going to feel more pressure as interest rates continue to rise.”
Unfortunately these strong GDP numbers don’t seem to be helping Wall Street shake off its correction blues. In fact, as of this writing, the Dow Jones Industrial Average has given up nearly all of the gains its made so far this year.
Another interesting economic wrinkle that’s come out in the last couple of days is a new survey that asked Americans if their finances had improved under President Trump. According to the Bankrate survey as reported on by MarketWatch, 38% of respondents shared that their finances have improved since November 2016 (note: the President didn’t take office until January 2017). Meanwhile 17% said they’ve actually gotten worse with the other 45% stating they’ve been about the same. Bankrate’s senior economic analyst Mark Hamrick explained these findings, saying, “Ultimately, a rising economic tide lifts many boats. It does not lift all of them. The economy is paying dividends for many Americans, but there are still many people and pockets of the U.S. economy that are hoping for those dividends to appear.”
While the financial focus this week may be set on the slumping Wall Street, these preliminary third quarter GDP results show that the U.S. economy is still chugging forward. Moreover CNN notes that any annual growth figure above 3% would mark the highest since 2005. Obviously we’ll have to see if the market woes and continued trade war slow things down in the fourth quarter but, for now, that milestone seems to be in sight.