Oct 30, 2019

U.S. economy grows 1.9% in the third quarter

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Data: Bureau of Economic Analysis; Chart: Axios Visuals

The U.S. economy grew at a 1.9% annualized pace in the third quarter, the Commerce Department said on Wednesday — higher than the 1.6% economists expected.

Why it matters: The economy is still growing at a moderate clip, though the number marks a significant slowdown in growth from just the beginning of this year — when GDP jumped 3.1% — as the boost from President Trump's tax cuts fades and the U.S.-China trade war weighs on growth.

Between the lines: The U.S. consumer has been the saving grace of the U.S. economy in recent quarters as cautious businesses hold off on spending.

  • The report shows this trend is continuing, though the strength of the U.S. shopper faltered. Consumer spending grew at 2.9% annual rate in Q3, a slowdown from the 4.6% rate in Q2.
  • Meanwhile, business spending weighed on growth, as investments in things like buildings, equipment and software fell 3%.

The bottom line: Q3's GDP report shows a slowing but still healthy economy — bucking fears of an imminent recession for now.

  • Still, it’s the second-worst GDP read of the Trump presidency, and growth has tapered sequentially this year.
  • A further slowdown would mean one less economic indicator the president can lean on as the 2020 election gets underway.

Go deeper: Trump's economic shield against impeachment

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U.S. GDP growth revised higher to 2.1% in third quarter

The U.S. economy grew at a 2.1% annualized pace in the third quarter — faster than the initial read of 1.9% — according to revised data released by the Commerce Department on Wednesday.

Why it matters: The revision occurred thanks to an upward revision in business spending, indicating that the economy's slowdown was not as harsh as feared in the face of the U.S.-China trade war. The change means that economic growth accelerated marginally from the prior quarter's 2% growth, but it's worth noting that economists are much less optimistic about growth prospects for the current quarter.

Go deeper: Nobel laureate Joseph Stiglitz calls for the end of GDP

Keep ReadingArrowNov 27, 2019

Consumers are picking up the lagging business sector's slack

Reproduced from LPL Research; Note: "Other components" includes housing, inventories, trade and government spending; Chart: Axios Visuals

The narrative of the U.S. economy lately has been strong consumer spending as the cornerstone of growth, offsetting lackluster business investment.

Driving the news: Economists pared down estimates for Q4 GDP — prompted by worse-than-expected economic data on Friday. The downgrades would have been worse, if not for retail sales figures that pointed to a solid, but slightly more cautious, consumer.

Go deeperArrowNov 18, 2019

N.Y. Fed forecast: U.S. Q4 GDP growth to fall to 0.8%

Data: Federal Reserve Bank of New York; Chart: Andrew Witherspoon/Axios

The New York Fed's GDP projection model predicted U.S. growth would slow to 0.8% in the fourth quarter.

Why it matters: If correct, it would be the weakest quarter since Q4 2015 and put the economy well off the pace of 2018's 2.9% annual growth.

  • However, prior to Q3's on-the-nose prediction of 1.9% quarterly growth, the N.Y. Fed's nowcasts haven't been especially accurate.

Go deeper: Economists see sustained low growth, but no recession