Sustainable 3.5% GDP growth in Q3 should allay rate increases

The U.S. economy continues to grow at a sustainable pace and that is good news for America. 

The slightly cooled 3.5 percent inflation-adjusted, annualized third quarter gross domestic product (GDP) gains should be seen by the Federal Reserve as evidence that the economy is not overheating. And when combined with the 1 percent increase in inflation on all goods and services over the past six months, the pressure for significant interest-rate increases should be allayed.

While the economic news is good with the 3.5 percent quarterly growth up from the 3.2 percent growth in the same quarter the year earlier, the Trump administration’s goal of reaching an annual growth rate of 3 percent for 2018 remains a challenge. It will depend upon a robust Christmas season. Based upon the methodology used by the Department of Commerce’s Bureau of Economic Analysis to determine GDP, the economy will still need to grow by about 4.14 percent annualized in Q4 to achieve the 3 percent annualized growth rate which the president seeks.                           

Rick Manning is president of Americans for Limited Government (ALG). The organization says it is a “non-partisan, nationwide network committed to advancing free-market reforms, private property rights and core American liberties.” This op-ed is drawn from a press release the ALG issued on Oct. 26.