FILE – In this image taken with a drone, Jason Kwapi operates a combine, at left, during soybean harvesting on the Voss farm near Palo, Iowa, Oct. 2, 2024. (Nick Rohlman/The Gazette via AP, File)
WASHINGTON — The American economy expanded at a healthy 2.8% annual pace from July through September on strong consumer spending and a surge in exports, the government said Wednesday, leaving unchanged its initial estimate of third-quarter growth.
U.S. gross domestic product — the economy’s output of goods and services — slowed from the April-July rate of 3%, the Commerce Department reported Wednesday.
Article continues after this advertisementBut 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.
FEATURED STORIES BUSINESS Toyota to churn out 20,000 Tamaraw units BUSINESS BIZ BUZZ: Power couple’s Polo Club bid foiled BUSINESS DA reimposes ban on poultry from CaliforniaREAD: US economy grew at solid 2.8% pace last quarter
Within the GDP data, a category that measures the economy’s underlying strength rose at a solid 3.2% annual rate from July through September, up from 2.7% in the April-June quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Article continues after this advertisementStill, 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.
Article continues after this advertisementConsumer spending, which accounts for about 70% of U.S. economic activity, accelerated to a 3.5% annual pace last quarter, up from 2.8% in the April-June period and fastest growth since the fourth quarter of 2023. Exports also contributed to the third quarter’s growth, increasing at a 7.5% rate, most in two years. Still, the third-quarter growth in both consumer spending and exports was lower than the Commerce Department initially estimated.
Article continues after this advertisementBut 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.
Article continues after this advertisementGrowth is steady. Unemployment is low at 4.1%. Inflation, which hit a four-decade high 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.
Wednesday’s report also contained some encouraging news on inflation. The Federal Reserve’s favored inflation gauge — called the personal consumption expenditures index, or PCE — rose at just a 1.5% annual pace last quarter, down from 2.5% in the second quarter. Excluding volatile food and energy prices, so-called core PCE inflation was 2.1%, down from 2.8% in the April-June quarter.
The public still feels inflation’s sting: Prices are about 20% higher than they were in February 2021, just before inflation started picking up
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 U.S. importers, who then seek to pass along the higher costs to their customers.
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Wednesday’s report was the second of three looks at third-quarter GDP. The Commerce Department will issue the final report on Dec. 19.ttslot
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