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US third-quarter economic growth revised down

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
In this AFP file photo taken on June 8, 2017, an employee works on the doors for a Mercedes-Benz C-Class at the Mercedes-Benz US factory in Vance, Alabama.

The US economy slowed in the third quarter more than previously estimated, and momentum appears to have moderated further early in the fourth quarter.

Gross domestic product increased at a 3.4 percent annualized rate, the US Commerce Department said in its third reading of third-quarter GDP growth. That was slightly down from the 3.5 percent pace estimated in October.

The US economy grew at a 4.2 percent pace in the second quarter, which spans from April to June.

Economists believe that economic growth is slowing in the fourth quarter to around 2.5 percent. Some analysts believe that by 2020, GDP growth may be barely above 1 percent or could slip into a recession that year.

The slowing economy is partly the result of a widening trade deficit, sluggish business spending on equipment and a weak housing market.

Consumer spending, which accounts for more than two-thirds of US economic activity, also fell slightly, increasing at a 3.5 percent rate in the third quarter, compared to 3.6 percent in the second quarter.

The slowdown in growth comes as a $1.5 trillion tax cut package fades and a bitter trade war with China and strong dollar undercut manufacturing.

The fiscal stimulus is part of measures adopted by the White House to boost annual growth. However, analysts believe that the boost from the tax cut and increased government spending Congress approved last February will begin to fade in 2019.

The Federal Reserve on Wednesday raised interest rates for a fourth time this year but lowered its outlook for rate hikes next year from three down to two.

The projection of fewer rate hikes by the central bank failed to calm Wall Street investors, who sent stocks sharply lower.

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