WASHINGTON – The US economy remained strong despite the slowdown it experienced at midyear, and showed an annual growth rate of 2.1 percent in the third quarter of 2019, according to the latest estimate of gross domestic product (GDP) progress announced by the government this Friday.
This is the third and last official calculation of economic activity between July and September.
Data released by the Commerce Department indicated that the economy grew at a 3.1 percent annualized rate between January and March this year, and by 2 percent in the second quarter.
Consumer spending, which represents almost two-thirds of the nation’s economic activity, grew between July and September by 3.2 percent, an improvement over the previous estimate of 2.9 percent.
The world’s leading economy continues to display its strength, despite the midyear slowdown.
This was particularly true in the labor market, with an unemployment index that remained below 4 percent, at levels not seen in the past 50 years.
At the same time, inflation began to show signs of a return after months below the annual 2 percent target set by the US Federal Reserve (Fed), the central bank of the United States.
The economy in November registered a year-on-year inflation of 2.1 percent, the most in a year, after the consumer price index (CPI) increased by 0.3 percent in that month.
Core inflation, which excludes the prices of food and energy due to their greater volatility, rose 0.2 percent in November, and stayed the same as in November 2018 at 2.3 percent.
After three cuts in interest rates to the current range between 1.75 percent and 1.5 percent, the Fed decided to leave the price of money unchanged in December.
About these reductions, Fed Chair Jerome Powell said they have helped economic activity stay on course.
In its meeting this month, the Fed noted that some uncertainties have been cleared up and that it aims to maintain its monetary policy through 2020 without modifications.
Meanwhile, trade tensions with China appear to have eased after a first-phase accord with Beijing shelved some punishing reciprocal tariffs, and then the House of Representatives passed this Thursday a new trade treaty with Mexico and Canada (T-MEC) – two moves that have somewhat calmed the markets after three weeks of not knowing what might happen next.
Despite the Fed’s monetary steadiness, US President Donald Trump again slammed the central bank for being too slow at cutting interest rates.
The president insisted that two rates of interest close to zero percent should be enacted in order to stimulate economic growth.
The next meeting of the Fed, the first in 2020, will be held on Jan. 28-29.
Despite its positive progress, the economy is far from keeping the promise Trump made upon his arrival at the White House in 2017 about taking the country to a sustained growth of over 3 percent annually, something that is yet to happen.
The markets greeted with optimism the GDP data, and Dow Jones Industrials, the principal Wall Street index that has hit historic highs, showed a 0.6 percent hike right after Friday’s opening bell.