What a Stagnant GDP Growth Rate Says About the US Economy

The U.S. economy may be poised for slower growth after reporting one of the best six-month streaks in the past decade.

The Commerce Department announced today that gross domestic product increased at a 3.5 percent annualized rate in the third quarter, unchanged from the initial estimate in October.

Consumer spending, on the other hand, was revised marginally lower as up 3.6 percent. The first estimate saw the same category rise a healthy 4 percent in the July-September period to mark the economy’s strongest quarter in nearly four years. Additionally, clothing and footwear noted a gain of 0.21 percent at an annual rate.

Although less than the 4.2 percent pace in the second quarter, the figures remain in line with the Trump administration’s 3 percent goal for each quarter this year and signal top-performing consecutive quarters of growth since 2014.

The president’s $1.5 trillion tax cut package, signed into law last December, slashed the corporate tax rate. The government credits it with leading the country’s economic boost by buoying business investment and reinforcing consumer confidence ahead of the busy holiday shopping season.

Adjusted corporate earnings before taxes climbed 3.4 percent in the third quarter, with profits in the past 12 months advancing at a 10.3 percent rate — the fastest increase since 2012.

Despite the positive outlook, it remains to be seen whether spending will be affected by the stock market’s volatility, trade war concerns, the Federal Reserve’s interest rate hike and the potential end of a long-term bull market.

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