Economists warned that estimates of business inventories, a major factor in the GDP rise, can vary significantly quarter-to-quarter.
Excluding that category, GDP – a broad measure of goods and services made in the US – increased at an annual pace of 2.3%.
The Commerce Department cautioned that its figures did not capture all the losses caused by the storms, which caused widespread closures of factories, offices and airports in states such as Florida and Texas.
Its GDP estimates, for example, do not measure activity in US territories, such as Puerto Rico, which suffered some of the most severe damage.
The Commerce Department estimated that storm-related damage to fixed assets, such as homes and government buildings, totaled more than $131 billion.
It also said it expected the government and insurers to pay more than $100 billion in insurance claims, with foreign companies accounting for more than $17.4 billion.
Commerce Department Secretary Wilbur Ross claimed Friday’s GDP report a sign of progress, calling it a “remarkable achievement in light of the recent hurricanes”.
President Donald Trump has made hitting annual GDP growth of 3% a goal, and pledged tax cuts and other policies intended to reach that pace or higher.
On a year-on-year basis, GDP was up 2.3%, the Commerce Department said in its report, which is an advance estimate that will be revised as more data is collected.
That pace is roughly in line with US expansion since the 2007-2009 recession.
Economists said the underlying economic strength shown in the report makes it more likely that central bankers at the Fed will raise interest rates again by the end of the year, as expected.
The price index for consumer spending, a closely-watched measure of inflation, increased at 1.3% in Q3, excluding food and energy. That remains below the Fed’s 2% target.
Meanwhile economists blame that trend on the way the data is collected.
Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: “US GDP figures are typically weaker in the first quarter, so this reading is in line with the seasonal trend.
“We haven’t yet had the expected fiscal stimulus from Trump, the effects of which may not be seen until the end of this year or the start of 2018.”
Nancy Curtin also pointed out that other data suggested strength in the US economy: “While investors might be disappointed with the reading, it has been a steady start to the year with inflation looking benign, a resilient jobs market and positive PMI [purchasing managers’] data.”
According to the Department of Commerce, the US gross domestic product (GDP) grew at an annualized pace of 1.5% in Q3 of 2015, down from a rate of 3.9% in Q2.
The slowdown was partly due to companies running down stockpiles of goods in their warehouses.
On October 28, the Federal Reserve kept rates unchanged and said the economy was expanding at a “moderate” pace.
Low oil prices have hit American energy companies so far this year.
However, lower fuel prices have been good news for consumer spending, which accounts for more than two-thirds of US economic activity.
Consumer spending grew at 3.2% in Q3, down from 3.6% in the second but still a strong reading.
Analysts said that the running down of warehouse stockpiles in Q3 was likely to be a temporary effect and they expected growth to accelerate again in Q4.
For several months there has been intense debate about when the Fed will raise interest rates, and now the focus is on its last meeting of the year in December.
The Fed has said in past statements that it expects to raise rates in 2015, and that labor market participation, inflation and the global economy would be the key factors in its decision.
In its latest statement on October 28, the Fed said: “In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2% inflation.”
However, the Fed dropped comments, which had been used in the previous month’s statement, that weaknesses in the global economy could affect the US.
Financial markets interpreted this as a sign that the Fed might be more likely to raise rates in December.
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.