US real GDP growth remained strong in the third quarter at 3.5 per cent, albeit down from 4.2 per cent in the second quarter. Economic growth was led by a strong contribution from consumer spending, which grew at its fastest rate since 2014, while an accumulation of business inventories made its largest contribution to growth since 2015. Government spending grew at its fastest rate in two years, but business investment slowed and net exports created their largest drag on growth in 33 years as US tariffs dampened trade. Today's data gives the US Federal Reserve further reason to keep tightening monetary policy, which will put further upward pressure on medium term interest rates in the US and Canada.
The US economy has been riding high this year from debt-financed government stimulus, but that growth is expected to slow in 2019 as that stimulus fades and higher interest rates and a continued trade war act to slow the economy.
Copyright British Columbia Real Estate Association. Reprinted with permission.