U.S. gross domestic product slowed in the third quarter but still beat expectations, boosted by strong consumer spending.
The country’s GDP grew at 1.9 percent this quarter, exceeding economists’ projections of 1.6 percent but still down from the second quarter’s growth rate of 2 percent, according to data released Wednesday by the Commerce Department.
Business investment continued to drop while imports, which subtract from GDP, increased. However, personal consumption expenditures in American households increased 2.9 percent and government spending ticked up by 2 percent, contributing to the GDP bump. At the same time however, retail sales decreased 0.3 percent last month, the first drop since February.
Consumption, over two-thirds of economic activity, continued to grow at 2.9 percent, down from the 4.6 percent growth rate reached in the second quarter.
The lackluster numbers come amid concerns that the economy is slowing down as trade battles with China and other countries continue to burden American companies and consumers.
The administration has slapped 10 and 25 percent tariffs on hundreds of billions of dollars in Chinese imports as the world’s two largest economies continue trade deal negotiations. In response, China has imposed 25 percent tariffs on tens of billions in U.S. goods.
Consumer spending decreased and threatened to pull the economy into an ugly downturn during the early months of the year. The drop came in the wake of the record 35-day partial government shutdown that stretched from December through January and cost the U.S. economy $3 billion that it will likely never recover, according to the Congressional Budget Office.
Also on Wednesday, the Federal Reserve cut its benchmark interest rate by a quarter of a percentage point, the third time it has done so this year. The new lending rate is from 1.5 to 1.75 percent. The first rate cut this year was the central bank’s first since December, 2008.