U.S. third-quarter economic growth trimmed; jobless claims rise

Ivan Schwartz
January 18, 2018

The Commerce Department originally projected real GDP to grow at a marginally higher rate of 3.3 percent off expectations that consumers would spend more money.

The slight difference in the estimate and the actual figures was attributed to less spending by consumers, although there was an increase in spending by state and local government.

Of course, the bottom line is that the US economy has expanded for two straight quarters by at least 3 percent, and if the current forecast holds, that streak should extend to three consecutive quarters. Growth in business investment in equipment was raised to a 10.8 percent pace, the fastest in three years, from the previously reported 10.4 percent.

Trump has predicted the tax cuts will be "rocket fuel" for the economy and many economists are looking for a growth spurt next year.

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Several economists are already predicting the economy will again climb above 3% in the fourth quarter.

. With that said, goods exports grew 1.8 percent in the third quarter, down from 2.2 percent in the second quarter. In the period from January to March 2017, the increase of this indicator remained at 1.2 percent.

Economists are forecasting a modest economic boost from the overhaul, which includes slashing the corporate income tax rate to 21 percent from 35 percent. But much of the Q3 bump was due to inventory accumulation - usually relatively transitory - that inflated the growth by 0.7 percentage points.

Growth in consumer spending, which accounts for more than two-thirds of the US economy, was revised down by one-tenth of a percentage point to a 2.2 percent rate in the third quarter. They are at odds with forecasts of the Trump administration that the tax cuts will spur significant momentum that will lift the economy to sustained annual GDP gains of 3 percent or better.

The U.S. economy is benefiting from a pickup in global growth, a healthy job market, which supports consumer spending, and a drop in the value of the dollar against other major currencies, which makes U.S. products less expensive in foreign markets.

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