US GDP grew 3.4% in Q3, held down by falling exports

WASHINGTON: US growth in the July-September quarter was slightly slower than previously reported, dragged down by the large drop in exports amid President Donald Trump’s multi-front trade wars.

With hundreds of billions of goods hit by retaliatory tariffs, US exports fell by the largest amount since early 2009 at the height of the global financial crisis.

Gross domestic product expanded by 3.4 per cent in the third quarter rather than the 3.5 per cent previously reported, due in large measure to the 4.9 per cent drop in exports, five-tenths more than the Commerce Department originally estimated.

Goods exports dropped 8.1 per cent, the biggest decline since the first three months of 2015.

Trump’s aggressive trade policies, and especially the tariff retaliation from China, has impeded exports, with soybean sales nearly grinding to a halt. The strong US dollar also has made American goods more expensive.

The smaller rise in consumer spending, largely the result of lower fuel costs, also contributed to the downward revision to GDP growth, the Commerce Department said.

Meanwhile, residential investment fell 3.6 per cent, only partly offset by 1.1 per cent gain in non-residential, or business, investment, data borne out by the slowdown in home construction and sales.

Other data show fourth quarter growth is shaping up to be even more sluggish. Purchases of durable goods — big ticket items like appliances, vehicles and machinery — rose in November compared to October, but much less than expected.

Orders were up 0.8 per cent last month, less than half the increase economists had forecast, according to a separate Commerce Department report. That follows a big drop in October, and will drag on GDP in the final quarter of 2018.

Excluding transportation goods, durable goods orders fell 0.3 per cent compared to October, and when defence is removed, the drop was 0.1 per cent.

Orders are still 8.4 per cent higher than they were through November 2017, but have been on a declining trend for three months.