In a show of resilience, the American economy grew at a solid pace in the latest quarter despite the impact of the hurricanes in Texas and Florida.þþThe nation’s gross domestic product, a key indicator of economic strength, expanded at an annual rate of 3 percent in the third quarter, the Commerce Department reported on Friday. Economists initially expected that Hurricanes Harvey and Irma would deal a blow to the country’s steady growth, but became more optimistic in recent weeks.þþThe destruction wrought by the storms was outweighed by the continued spending of consumers and businesses. The job market is lively, and the stock market has rallied to record highs. Chief executives and consumers are more confident than they have been in more than a decade, recent surveys show.þþ“There are no real headwinds to growth for the first time since the expansion began,” said Mark Zandi, the chief economist of Moody’s Analytics. “We are at full employment and we are in full swing, let the good times roll.”þþPersonal consumption, although down from the previous quarter, grew at a 2.4 percent pace, and nonresidential fixed investment, a measure of business spending, expanded at a robust rate of 3.9 percent. Mr. Zandi said the numbers were “a sign that consumers are hanging tough.”þþAt the same time, with a weak dollar making American goods more competitive abroad, international trade contributed positively to output for the third quarter in a row. Imports decreased.þþHurricanes can disrupt an economy in obvious ways — ruining homes, incapacitating infrastructure, and slowing the flow of goods across the country. The Houston metropolitan area is the country’s s fifth largest, accounting for 3 percent of national economic output, and the severe flooding brought on by Hurricane Harvey had an immediate impact on employment. The country’s economy shed 33,000 jobs in September, the first monthly drop in seven years.þþBut after the negative shock dissipates, the recovery from extreme weather events can help the economy by creating new reasons for consumer spending, which represents roughly 70 percent of national output. After the damage is done, people must often rebuild their homes or replace their cars, an effect that began to show up in the last quarter and will most likely continue through the end of the year.þþ“If you don’t go out to eat during a hurricane, maybe you bought plywood for your house,” said Robert Dye, chief economist at Comerica Bank. “If you have the insurance and support, that tends to be a stimulus to the economy.”þþHurricanes Harvey and Irma, for example, left 600,000 to one million vehicles needing replacement, according to Cox Automotive, and Americans rushed to dealerships to recoup what they had lost. Car sales spiked in September, reaching their highest level since 2005.þþThis is the government’s first estimate of economic output for the quarter, and the figure will be revised twice. It can be hard to accurately measure the full effect of a natural disaster immediately after it occurs, and so these numbers may swing up or down when the department revisits the period.þþThe American economy had been performing considerably better this year than in 2016, when it grew at a halting 1.5 percent. President Trump zeroed in on economic growth during his campaign and in office, promising to reach heights that eluded his predecessor.þþ“On a yearly basis, as you know, the last administration, during an eight-year period, never hit 3 percent,” Mr. Trump said during a speech in Missouri in August. Touting a strong quarter in the spring, when growth hit 3.1 percent, Mr. Trump suggested that “we’re really on our way” to sustaining that speed year-round.þþBut economists said the good news didn’t have much to do with recent political changes. Things have been looking up, economically, for much of the world, which is enjoying a rare moment of widespread expansion. The International Monetary Fund upgraded its forecast for the pace of world growth twice this year.þþ“This is happening globally — there isn’t a single major economy that is in recession,” said Mr. Zandi, the Moody’s economist. “This was an economic train that left the station a year or two ago. Regardless of who was president, we would have seen this.”þþ
Source: NY Times
