U.S. economy grows at 3.5 percent clip in third quarter

U.S. economy grows at 3.5 percent clip in third quarter
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The U.S. economy grew at a 3.5 percent annual clip in the third quarter, slower than the spring but still a good sign of the nation's economic health.

Growth was slower than the robust 4.2 percent in the April to June quarter but the economy continues to show strength in the final assessment before the midterm elections in less than two weeks, the Commerce Department reported on Friday.

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The two quarters are the best back-to-back showing since 2014.

Consumers unexpectedly upped their spending to a 4 percent pace in the July to September quarter, the strongest posting since 2014. Consumer spending accounts for 70 percent of the economy.

Jobs growth likely spurred more spending even as the labor market's expansion slowed in September to 134,000 jobs added. But the unemployment rate dropped to 3.7 percent, the lowest rate in 48 years as the job market tightens. 

President TrumpDonald John TrumpSarah Huckabee Sanders becomes Fox News contributor The US-Iranian scuffle over a ship is a sideshow to events in the Gulf South Korea: US, North Korea to resume nuclear talks 'soon' MORE regularly touts that his policies have kept the job market buzzing nearly two years into his presidency. 

But lawmakers, businesses and farmers have expressed growing concern that Trump's trade policies of applying tariffs to allies and hefty duties on U.S. imports from China are beginning to weigh on growth. 

The latest gross domestic product report shows that the lower third quarter figure reflects that trade is a drag on the economy with fewer exports leaving the United States for foreign destinations and more imports. 

The president has focused on lowering trade deficits but in recent months the gap has expanded, in some cases with countries like China to record levels.

rInventories and government spending, which increased at the fastest rate in two years, boosted economic growth for the quarter. 

Jason FurmanJason FurmanTrump looks for longer boost from economy US economy grew at 3.2 percent in first quarter, exceeding expectations The Hill's Morning Report - Dems contemplate big election and court reforms MORE, former head of the Council of Economic Advisers for President Obama, said on Twitter that to hit 3 percent annual growth, the fourth quarter number would have to be at least 3.3 percent.

But business investment only expanded at a 0.8 percent pace — the worst since late 2016 — after posting a solid 8.7 percent gain in the second quarter and 11.5 percent in the first three months of the year.