The U.S. economy grew at a higher rate than expected in the third quarter, buoyed by strong inventory investment and a lower trade deficit.
Real gross domestic product (GDP) surged by 3.0 percent in the third quarter, according to the “advance” estimate released by the Bureau of Economic Analysis (BEA). This is slightly lower than the 3.1 percent increase in the second quarter.
Economists were expecting weaker growth for the quarter due to a drag from hurricanes Harvey and Irma.
“Despite the damage from this year’s hurricane season, the U.S. economy grew at 3 percent for the second quarter in a row,” stated White House Press Secretary Sarah Sanders in a press release.
“With unemployment at a 16-year low, the stock market at new highs, and economic confidence soaring, the U.S. economy is surging under this President’s leadership.”
President Donald Trump has focused on a sustained 3 percent growth rate and said earlier it could go even higher.
The hurricanes caused severe damage and flooding in several states along the Gulf Coast during the third quarter, stated the BEA report. These disasters disrupted the operations of factories, offices, and transportation centers.
“For example, oil and gas extraction and petroleum and petrochemical production in Texas and agricultural production in Florida were impacted,” stated the report.
Trump’s business-friendly policies have raised business optimism since the election, which has encouraged companies to spend more.
The increase in inventory investment mainly reflects increases in wholesale and manufacturing inventories.
According to Citi economist Andrew Hollenhorst, the GDP has been increasing above trend and the ISM Manufacturing Index, a survey of 300 manufacturing companies that monitors employment, production, inventories, new orders, and supplier deliveries, is at a historic high, pointing to further strong results ahead.
“The most positive recent development, in our view, is the continued expansion in investment spending. This would be the fourth consecutive quarter of positive growth in business equipment investment,” wrote Hollenhurst.
“Without the drag from the hurricane, growth would have been around 3.5 percent,” he predicted.
From The Epoch Times