US economy grows at 2.8% pace in Q3 on consumer spending, unchanged from first estimate
The Commerce Department reported that growth in US gross domestic product — the economy’s output of goods and services — slowed from the April-July rate of 3%. But the GDP report still showed that the American economy — the world’s largest — is proving surprisingly durable. Growth has topped 2% for eight of the last nine quarters.
Still, American voters — exasperated by high prices — were unimpressed by the steady growth and chose this month to return Donald Trump to the White House to overhaul the nation’s economic policies. He will be supported by Republican majorities in the House and Senate.
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But growth in business investment slowed sharply on a drop in investment in housing and in nonresidential buildings such as offices and warehouses. By contrast, spending on equipment surged. When he takes office next month, President-elect Trump will inherit an economy that looks broadly healthy.
Growth is steady. Unemployment is low at 4.1%. Inflation, which hit a four-decade high of 9.1% in June 2022, has fallen to 2.6%. That is still above the Federal Reserve’s 2% target, but the central bank felt satisfied enough with the progress against inflation to cut its benchmark interest rate in September and again this month.
Most Wall Street traders expect the Fed to cut rates again in December. The public still feels inflation’s sting: Prices are about 20% higher than they were in February 2021, just before inflation started picking up.
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Trump has promised an economic shakeup. On Monday, for example, he vowed to slap new import taxes on goods from China, Mexico and Canada. Mainstream economists view such taxes — or tariffs — as inflationary. That is because they are paid by US importers, who then seek to pass along the higher costs to their customers.
Wednesday’s report was the second of three looks at third-quarter GDP. The Commerce Department will issue the final report on December 19.
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