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Inventory investment is expected to have added as much 2 percentage points to GDP growth after slicing off 1.1 percentage points from output in second quarter.

The Commerce Department, in its initial report on the third quarter, found gross domestic product (GDP), the sum of all goods and services sold in the US economy, grew by 3.5 percent, slightly better than economists expected.

The pickup in private and public consumption is "what you would expect" from fiscal stimulus, but the burst in business spending "looks to be fading", said Michael Gapen, chief USA economist at Barclays and a former Federal Reserve official. The gain was very close to Wall Street estimates.

But economists say growth should slow in the coming quarters as tax cuts and fiscal stimulus recede into the past while inflation mounts, interest rates rise, protectionist trade measures continue to bite and growth slows in the world's other major economies.

More broadly, the International Monetary Fund earlier this month cut its global growth forecast for the first time in two years, blaming escalating trade tensions and stresses in emerging markets. That hasn't happened since 2005.

Third quarter data marks the strongest back-to-back growth since 2014.

Consumer spending jumped at a 4 percent rate in the July-September quarter - the fastest in about four years and topping the 3.8 percent in the prior three months.

Within that category, spending on structures shrank 7.9%, the biggest drop in nearly three years, after a 14.5% surge in the prior period that partly reflected investment in oil production.

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In Riccadonna's view, unless there are more tax or another change in fiscal policy, growth in the second and third quarter's appears to be boosted by a "sugar high" from tax cuts rather than creating a new path for economic growth. Excluding food and energy, the central bank's preferred price index also rose at a 1.6% rate.

Shipments were front loaded by US farmers to China prior to the tariffs taking effect during early July, increasing growth in the second quarter.

Total exports fell 3.5 per cent, the weakest showing since the end of 2016, while imports gained 9.1 per cent, the fastest growth since the end of past year.

In fact, in July President Donald Trump predicted that "We're going to go a lot higher" than the 4.2% achieved in the second quarter, and has been out selling the robust economic numbers on the campaign trail.

The United States economy continued to roar to life under President Trump and the Republican-led Congress in the third quarter of 2018; beating expectations as GDP grew at a healthy 3.5% pace.

After stripping out the volatile categories of trade, inventories and government spending, final sales of domestic product rose at an annual rate of 1.4% - lower than the overall GDP number.

This was the Department's first estimate of third-quarter GDP growth. There were also decreases in exports of petroleum and non-automative capital goods. During the past 4 quarters, GDP has grown 3.0 percent. Shares of Caterpillar Inc., an economic bellwether, tumbled this week after the maker of mining and construction equipment said manufacturing costs were higher due to rising material and freight costs.

"The stock market is going to go up and down", he said. Spending on structures fell at a 7.9% rate in the third quarter.