You are here

US Q3 GDP growth unrevised at 2.1%

US officials on Friday confirmed their picture of moderate but steady economic growth in the third quarter of this year, while estimated investments by companies improved slightly.

Amid low unemployment and steady job growth, the numbers should offer some comfort to President Donald Trump as he embarks on a tumultuous re-election campaign while working to resolve a damaging trade war with China.

GDP growth in the July-September period advanced at an annual rate of 2.1 per cent, according to the Commerce Department's third estimate, matching the estimate produced last month.

Growth in the third quarter was a notch faster than in the second quarter, avoiding a drop-off that economists had initially feared.

The department's latest snapshot of the world's largest economy – based on a fuller set of newly available data – again showed US consumers and companies are on diverging paths.

While the public continues to spend, propping up growth, skittish companies, battered by Mr Trump's trade confrontation with China, are withholding investment.

Growth is still well below the sustained 3 per cent target set by the White House. Economists say growth could fall below 2 per cent in the final months of 2019 and the first quarter of 2020.

Consumer spending, which represents the lion's share of US economic activity, was revised upwards as Americans spent more on services like "personal care" and investment.

This offset a steep cut to spending on food and beverages as well as declines for durable goods like cars.

Meanwhile, the picture for business investment improved a little, thanks to a sharp uptick in building of electrical power stations – but it was still a net drag on growth.

Companies complain that Mr Trump's trade war has left them uncertain of their supply chains and markets, facing higher input prices and slower demand abroad, making them reluctant to spend.

However, Washington and Beijing this month announced a partial trade deal, cancelling and removing tariffs and marking a truce in the nearly two-year conflict.

The Commerce Department is due to publish its first estimate of Q4 growth in late-January.