WASHINGTON • The US economy slowed a touch in the third quarter but remained solid, thanks to a pick-up in home sales and steady consumer spending, government figures showed yesterday.
Gross domestic product (GDP) growth avoided the steeper drop-off feared by economists, but the US-China trade war still walloped the business sector, according to Commerce Department data.
The steady expansion offered US President Donald Trump a measure of relief for his economic agenda, which has failed to produce the 3 per cent growth he touted.
The economy expanded 1.9 per cent in the July to September period, well above economists' expectations but a notch lower than the 2 per cent growth seen in the second quarter. The result, which is subject to revision, muddies the waters a bit for the US Federal Reserve, which yesterday was expected to announce a third consecutive interest rate cut in an effort to buoy flagging growth amid the uncertainty caused by Mr Trump's trade wars.
"The Greatest Economy in American History!" Mr Trump tweeted an hour before the data was released.
But while the White House may breathe a sigh of relief, the details also offered a few reasons to gasp.
Rattled by the uncertainty over trade wars and a global economic slowdown, business investments tumbled the most in nearly four years, according to the report.
The decline in investments in structures accelerated to their second straight double-digit drop. Consumer spending remained solid but slowed ahead of the holiday season, with spending on durable goods like computers cut nearly in half, the data showed.
The housing sector was a bright spot. After dragging on the economy for over a year, spending on new and existing homes jumped higher as would-be home owners pounced on attractive mortgage rates in recent months.
Exports also recovered slightly, posting a modest increase and adding somewhat to growth after tumbling in the second quarter.
A slowing global economy has hit foreign demand for US goods and services, raising fears the world's troubles could wash up on US shores. The Fed has rolled back some of the increases in the benchmark lending rate implemented last year when the economy was strengthening, but if GDP growth holds up, it makes the decision on the next step more complex.