US economy grew at 2 percent pace in third quarter

The U.S. economy grew at a slightly slower pace through the summer than initially estimated, but the forecast for next year is looking brighter.

Economic growth expanded at a 2 percent annual pace in the July-September quarter, down a tad from the 2.1 percent in the previous estimate, the Commerce Department said Tuesday.

{mosads}Third-quarter growth was well below the 3.9 percent in the April-June period but above the anemic 0.6 percent increase in the January-March quarter weighed down by bad weather and a West Coast ports dispute.

Economists said the slow down last quarter was mostly due to a pullback of inventory investment — a volatile component of growth — that subtracted 0.7 percentage point from the overall expansion, which was slightly more than previously estimated.

Gus Faucher, PNC’s senior economist, said the economy “should continue to expand at an above-trend pace through next year.”

“With solid job gains, accelerating wage growth, lower energy prices boosting after-inflation incomes and low interest rates, consumer spending will continue to lead overall economic growth,” Faucher said.

PNC is forecasting growth of 2.7 percent in the fourth quarter, and then 2.4 percent in 2016.

Jason Furman, chairman of the Council of Economic Advisers, said that third-quarter economic growth “continued at a solid pace as domestic demand grew robustly.”

“Slowing foreign growth continues to weigh on output in the United States, underscoring the importance of policies that promote continued strong and consistent domestic demand,” Furman said in a statement.

Third-quarter growth was boosted by consumer spending, which rose 3 percent.

Furman cited last week’s passage of an omnibus budget and tax agreement as a way to boost growth.

“But there is more work to do, and the president remains committed to policies that will boost our long-run growth and wages: including opening our exports to new markets through high-standards free trade agreements like the Trans-Pacific Partnership and raising the minimum wage,” he said.

Exports continued to weigh on output, subtracting 0.3 percentage point because of the dollar’s strength, which is making U.S. exports more expensive overseas and thus weighing on global demand.