Inventory investment is expected to have added as much 2 percentage points to GDP growth after slicing off 1.1 percentage points from output in second quarter.
The U.S. economy grew at a 3.5 percent annual growth rate in the third quarter, considered strong but lower than the 4.2 percent rate at which it grew in the second quarter, according to a U.S. Bureau of Economic Analysis report Friday.
Fed officials have recently talked about "optimism and acceleration in capital spending and could it lift the supply side", but the slowing in business investment "is inconsistent with a sizable improvement in spending", said Michael Gapen, chief USA economist at Barclays Plc and a former official at the central bank. The gain was very close to Wall Street estimates.
China's economic growth is expected to reach around 6.6 percent in 2018, according to a research report jointly released by Economic Information Daily, Xiamen University and University of London on Thursday. The two quarters marked the strongest consecutive quarters of growth since 2014. "Defying "conventional wisdom" once again, 3.5 percent growth is the latest sign that the Trump economy continues to surge", Ross said. That hasn't happened since 2005.
Third quarter growth might have been even stronger if not for the sagging housing market.
Earlier this week, The Wall Street Journal wrote, "A stark pickup in government spending, particularly in defense, has helped fuel a broad acceleration in US economic growth in the past year and a half", with the sharp uptick in outlays associated with the budget deal earlier this year accounting for almost half of the economic growth during that time. Investment spending in new residences has now fallen for three quarters (nine months) in a row and the decline seems to be picking up.
Real disposable personal income grew at an annual rate of 2.5%, the same as last quarter.
Kabul attack on election workers kills 1
Ghazni elections were delayed for an as yet indefinite period due to disagreements over constituencies and security issues. According to police, a suicide bomber on foot detonated his explosives close to the gate of the offices.
Farmers front-loaded shipments to China before the tariffs took effect in early July, boosting second-quarter growth.
Total exports fell 3.5 per cent, the weakest showing since the end of 2016, while imports gained 9.1 per cent, the fastest growth since the end of previous year.
The central bank has raised rates three times this year and signalled it will raise rates one more time this year and expect to raise rates three times in 2019. Price data in the GDP report showed inflation at a 1.6% annualized pace last quarter, below the Fed's 2% goal.
The US Commerce Department figures showed lower exports weighed on growth in the quarter. "It appears most business leaders have become somewhat cautious about the future and are holding off committing to major investment plans", said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. However, since that time exports of soybeans have dropped each month which increased the trade deficit. By buying more, the importers seem to have anticipated, in July and August the second round of tariffs on chinese goods imposed in September. In addition, the stock market turmoil is seen reducing household wealth.
Housing continued to be a drag, falling for a third straight quarter.
Government spending rose at a pace of 3.3% during the third quarter, the fastest since the first quarter of 2016.