The U.S. economy grew at a faster than expected rate during the third quarter, fueled by strong consumer spending.
The Commerce Department reported for July through September the Gross Domestic Product rate was 3.5 percent, slightly higher than the 3.4 percent predicted by economists surveyed by The Wall Street Journal.
Meanwhile, inflation grew at a slower rate than expected for the quarter, 1.6 percent PCE (price consumption expenditures).
Economists polled by StreetAccount had anticipated a 2.2 percent increase, CNBC reported.
“Consumer spending, which accounts for more than two-thirds of total economic output, rose at a 4.0% annual rate in the third quarter, the strongest rate of growth in nearly four years,” according to The Journal. “A low unemployment rate, steady job and wage growth and the late-2017 tax overhaul encouraged spending by consumers.”
The paper noted that the tax cut passed last December was a central pillar of President Donald Trump’s plan to boost economic growth to above 3 percent annually, which was a mark consistently seen during the economic expansions in the 20th century.
During former President Barack Obama’s time in office, the economy averaged just under 2 percent growth annually, which was the worst recovery from a recession since the Great Depression.
The GDP growth rate was 1.6 percent during his final year in office.
Vice President Mike Pence touted the third quarter GDP growth number in a tweet on Friday morning.
“Under @POTUS Trump, the American economy is making a REAL COMEBACK after nearly a decade of slow growth,” he wrote. “Consumer confidence has hit a nearly 20-year high, 4.2 million jobs have been created, and Q3 GDP growth is at 3.5%. AMERICA IS BACK!”
Under @POTUS Trump, the American economy is making a REAL COMEBACK after nearly a decade of slow growth. Consumer confidence has hit a nearly 20-year high, 4.2 million jobs have been created, and Q3 GDP growth is at 3.5%. AMERICA IS BACK! https://t.co/cNrO5R3W1e
— Vice President Mike Pence (@VP) October 26, 2018
The 3.5 percent growth is slightly down from the 4.2 percent seen during the second quarter.
The Commerce Department indicated it could not estimate the overall impact of Hurricane Florence on the economy, which hit North Carolina in mid-September.
“The headline was not too far from expectations, but we did get a few surprises. Consumer was stronger than we expected,” Scott Brown, chief economist at Raymond James, told The Journal.
Trump’s top economic adviser Larry Kudlow predicted after the second quarter GDP number exceeded expectations, the economy would continue to experience strong economic growth.
“I don’t think this is the end of the numbers,” he said in July. “I was watching some TV this morning saying, ‘Wow, they got one, but it’s not sustainable’… Bulletin, it is sustainable.”
Kudlow explained, “We’ve lowered tax rates, we’ve rolled back regulations, we’ve unleashed energy, we’re moving to fix the broken world trading system. You can see big numbers on capital spending, business investment.”
“My hunch is it’s going to go on for quite a while. It’s not just one quarter,” he said.
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