WASHINGTON – The Commerce Department will issue the second of its three estimates of how the overall economy performed between July and September.
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WHAT'S EXPECTED: Economists believe that the economy, as measured by the gross domestic product, expanded at an annual rate of 3 percent in the third quarter, according to a survey of economists from the data firm FactSet.
WHAT'S THE TREND: That would be slightly better than the initial estimate a month ago that projected the GDP expanded at a 2.9 percent rate in the summer. Yet even that was the strongest growth rate in two years following an anemic nine-month stretch during which investment spending by U.S. energy companies was trimmed, the dollar strengthened hurting exports, and businesses tried to slim unwanted inventory, meaning that they cut back spending on new goods.
Economists believe a boost in the GDP estimate Tuesday will reflect new-found strength in a variety of areas. These include greater consumer spending and business investment in equipment and structures, more export sales and slightly stronger government spending. That strength will offset an expected reduction in support from inventory restocking.
More robust growth in the third quarter has not changed the view of economists about the current quarter. They see growth slowing from October through December.
They believe that after the strongest quarter of the year,
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Analysts believe in terms of GDP growth, the third quarter will turn out to be the strongest quarter this year, as the rebuilding of inventories begins to wane.
During the campaign, President-elect Donald Trump decried what he saw as a sluggish recovery under Obama, when GDP growth averaged just 1.5 percent in the wake of the deepest recession since the 1930s. Trump said he wanted to set a national goal of reaching 4 percent growth during his administration.
Most economists think that may be overly optimistic given the mass retirement of baby boomers, which would weaken growth in the labor market, and very tepid productivity growth.
Some economists have said they will boost their GDP forecasts if Trump is successful in getting Congress to pass his package of tax cuts and increased spending in such areas as defense and infrastructure projects. But their current estimates put growth at around 2.5 percent over the next two years, an improvement from their current forecast of growth next year of around 2 percent, but well below Trump's 4 percent target.