The U.S. economy grew at a robust pace of 3.4% in the third quarter, but was revised down 0.1% from earlier estimates as a government shutdown, rising interest rates and a bearish stock market slide has led some economists to trim fourth quarter and year-end 2018 forecasts.
According to the “third” estimate released by the Bureau of Economic Analysis (BEA), real U.S. gross domestic product (GDP) in the third quarter was one-tenth of a percentage point below the earlier 3.5% growth in first and second in October and November, respectively. The nation’s chief economic research group, which is housed in the U.S. Department of Commerce, revises GDP data two times after the first release as more data become available.
Despite the slightly lower final reading, third quarter annual GDP — the value of goods and services produced by the nation’s economy less the value of the goods and services used up in production — has kept the U.S. economy on pace to close out the year at or above the Trump administration’s 3% target for annual GDP growth.
After advancing 2% and 4.2%, respectively, in the first and second quarter, the U.S. economy remained hot through July, August and September in step with Wall Street expectations. Going forward, a survey of top U.S. economists now forecast 3.1% GDP growth in 2018 and 2.3% GDP growth in 2019, according to the Wall Street Journal Economic Forecast Survey.
Overall, profits from current production increased $78.2 billion in the third quarter, up 17% when compared with an increase of $65 billion in the second quarter. Current-dollar GDP increased 4.9% or $246.3 billion to a level of $20.66 trillion. In the second quarter, current-dollar GDP rose by 7.6%, or $370.9 billion.
Amid the recent economic turmoil in the fourth quarter, the Atlanta Fed’s GDPNow model now forecasts fourth quarter GDP at a modest 2.9%, which will still allow the U.S. economy to close out 2018 at just above 3% annual growth.