U.S. GDP grew at a 3.5 percent annual rate in the third quarter, putting the economy on track for its best year since before the recession.
nytimes.com/2018/10/26/bus…
nytimes.com/2018/10/26/bus…
Consumer spending was strong. But business investment not great. More than 2 percentage points of the growth came from a big bump in inventories.
Final sales to domestic purchasers -- a measure of underlying demand, stripping out trade and inventory effects -- rose at a 3.1% rate. Solid, but slower than in Q2. 
Companies are investing more in intellectual property. But other than that, business investment was anemic in Q3. Not much evidence of a big boost from the tax law.
Housing slowdown is now very clear in the data. Residential investment fell for third straight quarter, negative in five of last six.
Core inflation (measured year-over-year) hit 2% for first time since 2012. But no acceleration in headline rate.
Government spending added more than half a point to Q3 growth. Federal spending rising strongly for four straight quarters now.
Bottom line: This report was a bit disappointing in some details (esp. business investment). But underlying economy is clearly strong. On track for first full year of 3% growth since 2005.
nytimes.com/2018/10/26/bus…
nytimes.com/2018/10/26/bus…
As @IanShepherdson notes: Pace of growth clearly lifted by what amounts to a massive, pro-cyclical fiscal stimulus (tax cuts and increased spending). Which of course is part of what is leading Fed toward the rate hikes Trump is so angry about.
Fixing chart above to remove stray "residential" in the hed. (Chart otherwise unchanged.) h/t @TheStalwart
