U.S. economy slowed in 2018’s third quarter

The U.S. economy slowed in the third quarter to a still-strong 3.5 percent annual growth rate, as free spending from consumers and the federal government carried the load.

Growth dipped from the second quarter’s 4.2 percent rate, but the economy still posted its best back-to-back quarters in four years and is within reach of the Trump administration’s 3 percent annual growth target.

“Despite all the hand-wringing about the (stock) market, the economy is looking pretty good,” said Ethan Harris, head of global economics for Bank of America Merrill Lynch. “The story here is a double dose of caffeine from tax cuts and spending increases.”

Strong consumer and government spending boosted growth in the July-September period. A buildup in goods inventories also helped, suggesting potential weakness ahead if companies lower production while selling off any backlog.

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