The US economy
expanded at an annual pace of 3% during the three months to the end of
September, which was stronger than expected.
The growth extended
the robust activity reported in the previous quarter, when US GDP grew at an
annual pace of 3.1%.
Analysts had been
expecting a sharp slowdown after back-to-back hurricanes battered several
states in the quarter.
But consumer spending
held steady, despite a drop in homebuilding investment.
Together the two quarters mark the strongest six months of economic
activity for the US since 2014, the Commerce Department said.
"Overall, this is
a very solid performance, given the disruption caused by Hurricanes Harvey and
Irma," wrote Ian Shepherdson of Pantheon Macroeconomics.
"Their net effect
seems to have been smaller and shorter than we expected."
What went into the figure?
Consumer spending,
which increased at a hearty 3.3% rate in the second quarter, slowed to 2.4%
growth - a deceleration probably caused by the hurricanes.
Construction spending
also fell, but exports and business investments in equipment and intellectual
property accelerated from the previous quarter.
Economists warned that
estimates of business inventories, a major factor in the GDP rise, can vary
significantly quarter-to-quarter.
Excluding that
category, GDP - a broad measure of goods and services made in the US -
increased at an annual pace of 2.3%.
The Commerce
Department cautioned that its figures did not capture all the losses caused by
the storms, which caused widespread closures of factories, offices and airports
in states such as Florida and Texas.
Its GDP estimates, for
example, do not measure activity in US territories, such as Puerto Rico, which suffered
some of the most severe damage.
The Commerce
Department estimated that storm-related damage to fixed assets, such as homes
and government buildings, totalled more than $131bn (£100bn).
It also said it
expected the government and insurers to pay more than $100bn in insurance
claims, with foreign companies accounting for more than $17.4bn.
Commerce Department
Secretary Wilbur Ross claimed Friday's GDP report a sign of progress, calling
it a "remarkable achievement in light of the recent hurricanes".
President Donald Trump
has made hitting annual GDP growth of 3% a goal, and pledged tax cuts and other
policies intended to reach that pace or higher.
"President
Trump's bold agenda is steadily overcoming the dismal economy inherited from
the previous administration," Mr Ross said. "As the President's tax
cut plan is implemented, our entire economy will continue to come roaring back."
On a year-on-year basis,
GDP was up 2.3%, the Commerce Department said in its report, which is an
advance estimate that will be revised as more data is collected.
That pace is roughly
in line with US expansion since the 2007-2009 recession.
Kenneth Rogoff, a
professor of economics at Harvard University, said the growth reflects
improvement in the labour market and other areas that date back to the Obama
administration.
While some of the
president's plans may boost growth, they're not in place yet, he said.
"Let's make no
mistake - this was a very good number," he said. "Jobs have been
improving, consumption's been improving, businesses are doing better, there is
a profound inequality problem but the US economy, despite not much from
President Trump, has been doing well."
Economists said the
underlying economic strength shown in the report makes it more likely that
central bankers at the US Federal Reserve will raise interest rates again by
the end of the year, as expected.
The price index for
consumer spending, a closely-watched measure of inflation, increased at 1.3% in
the third quarter, excluding food and energy. That remains below the Federal
Reserve's 2% target.
Source : http://www.bbc.com/news/business-41779341