The US economy is growing at a faster-than-expected rate in Q3 2017, according to the first-reading data from the Department of Commerce. The data highlights the sustained demand from consumers and businesses despite the problems caused by hurricanes Harvey and Irma. The gross domestic product (GDP) is growing at 3% annual growth rate in the third quarter, against a growth of 3.1% in previous quarter. The projections were for an increase of 2.6%.
The consumer spending, the bulk of the economy, rose by 2.4%, which is above expectations of 2.1%. There was a slowdown compared to the second quarter, when growth was 3.3%. This component adds 1.6 percentage points to economic growth in the third quarter. Many Americans have bought new cars to replace those damaged by disasters. The service costs, however, are slowing to the slowest pace since 2013. A stable labor market, however, limited inflation and low interest rates are expected to continue to provide the basis for sustainable consumer spending.
The fixed business investment grew by 1.5% and added 0.25 points to growth.
Trading and stock hold combined add 1.14 points to the raise.
The Ministry of Commerce says they can not calculate the impact of hurricanes on GDP. The tropical storms Harvey and Irma have caused huge damage to parts of Texas and Florida in late August and early September. However, the negative effect is expected to be transient, as economic activity is likely to accelerate.
The second and third readings of US GDP data are expected in November and December respectively.