WASHINGTON: The US economy, bolstered by business investment, grew at a solid annual rate of 3% in the third quarter. It marks the first time in three years that growth has hit at least 3% for two consecutive quarters.
The Commerce Department reported on Friday that the July-September advance in gross domestic product followed a 3.1% rise in the second quarter. It was the strongest two-quarter showing since back-to-back gains of 4.6% and 5.2% in the second and third quarters of 2014.
The economy accelerated despite the impact of hurricanes Harvey and Irma, which many private economists believe shaved at least one-half percentage point off growth.
The third-quarter performance was certain to be cited by President Donald Trump, who pledged during last year's campaign that his economic programme would boost growth from the anaemic 2.2% averages seen since the country emerged from the Great Recession in mid-2009.
Trump during the campaign said his policies of tax cuts, deregulation and tougher enforcement of trade laws would achieve growth of 4% or better, though his first budget projects growth hitting 3% in the coming years.
However, private economists believe even 3% annual gains will be hard to achieve for an economy facing a slowdown in productivity and an ageing workforce.
For all of 2017, private forecasters believe the economy will grow at an annual rate of around 2.2%, rising to 2.4% in 2018. That would be an improvement from 1.5% in 2016 but would still fall below the expectations of the Trump administration.
The 3% growth rate for third-quarter GDP and the 3.1% increase in the second quarter followed a much weaker 1.2% increase in the first quarter.
In the third quarter, consumer spending slowed slightly to 2.4% from a sizzling 3.3% in the second quarter. The slowdown was offset to some extent by a strong 8.6% gain in business investment in equipment and an increase in business rebuilding of inventories, which added 0.7 points to third-quarter growth.
Other areas showed weakness. Government spending fell for a third straight quarter, dropping 0.1%. Residential construction fell at a 6% rate following a 7.3% rate of decline in the second quarter.
Many analysts believe growth in the current quarter will come in around 2.7%.
The House of Representatives on Thursday gave approval to a Republican-proposed budget that would provide for $1.5 trillion in tax cuts over the next decade. Administration officials have said the tax cuts will spur faster growth and the faster growth will erase much of the cost of the tax cuts. Democrats and many private economists have challenged that forecast.