WASHINGTON -- A smaller trade deficit and a surge in defense spending buoyed U.S. economic growth in the third quarter, but other details of Thursday's report hinted at some loss of momentum in activity.
Gross domestic product grew at a 3.5 percent annual rate, the Commerce Department said Thursday, beating economists' expectations for a 3 percent pace.
While the pace of growth in business investment, housing and consumer spending slowed from the second quarter, all those categories contributed to growth.
"The report was broadly constructive, with the gains broadly based and pointing to positive underlying momentum in the U.S. economy," said Millan Mulraine, deputy chief economist at TD Securities in New York.
"However, with some indications of weakness emerging in housing and consumption spending, we expect the pace of growth to slip further in the fourth quarter."
Despite decelerating from the second quarter's brisk 4.6 percent pace, it was the fourth quarter out of five that the economy has expanded at or above a 3.5 percent clip.
The dollar extended gains against the euro and the yen, while prices for U.S. Treasury debt trimmed gains.
The narrower trade deficit reflected a plunge in imports, which fell at their fastest pace since the fourth quarter of 2012. That was largely attributed to a drop in oil imports.
Trade added 1.32 percentage points to growth. Although there are concerns a strengthening dollar and slowing euro zone and Chinese economies will crimp U.S. export growth, economists believe the impact will be marginal.
Government spending was also a boost, with defense spending rising at a 16 percent rate, its fastest pace since the second quarter of 2009.
One of the few areas that was a drag on growth was inventories, which subtracted 0.57 percentage point from GDP after adding 1.42 percentage points in the second quarter.
Business Spending Slows
Growth in business investment slowed in the third quarter, with spending on equipment rising at only a 7.2 percent rate. Economists had expected a second straight quarter of double-digit growth.
Business spending on structures and intellectual property products also slowed. Data on Tuesday suggested further moderation in the pace of equipment investment in the fourth quarter, but it is still expected to remain strong enough to keep the economy on a higher growth pace.
While growth in consumer spending decelerated to a 1.8 percent pace from the second-quarter's 2.5 percent pace, it still contributed 1.22 percentage points to GDP growth.
Consumer spending accounts for more than two-thirds of U.S. economic activity.
The moderate pace of consumer spending helped keep inflation pressures under wraps during the quarter.
A price index in the GDP report rose at a 1.2 percent rate in the third quarter after advancing at a 2.3 percent pace in the prior period. A core price measure that strips out food and energy costs increased at only a 1.4 percent pace, slowing sharply from the second quarter's 2 percent rate.
Declining gasoline prices and accelerating job growth, which is expected to lift wages, will provide tailwinds for consumer spending in the fourth quarter.
The Monster in the Closet: Economic Horrors and Scary Movies
If you thought this classic horror movie was about a haunted house, see if this scenario sounds familiar: An idealistic young couple buys a home that sounds too good to be true. Once they're mortgaged to the hilt, problems start to crop up. They can't leave, they can't stay, and an unseen evil force starts to tear their family apart.
Filmmakers have used zombies to symbolize everything from faceless corporations to the inhumanity of the military industrial complex. In this early offering (and, to a lesser extent, in its remake), it isn't particularly hard to figure out the greater symbolism of a bunch of mindless, shambling zombies swarming into a shopping mall.
Speaking of mindless shambling, "Shaun of the Dead" used the same conceit to symbolize office work.
Everybody remembers Janet Leigh's death scene in the classic slasher flick. What they forget, though, is why she ended up in the Bates Motel in the first place: She was on the run after stealing a small fortune from her employer. As for the motel itself, it was facing hard times because the recently-unveiled highway drove away business.
For a funnier take on a similar story, you might try taking a peek at "Auntie Lee's Meat Pies", which manages to brilliantly combine cannibalism, serial murder and Pat Morita.
Forget ghosts and ghouls: Few things are scarier than asking the bank for a loan. But in this Sam Raimi-directed flick, the tables are turned as a young loan officer turns a deaf ear to a seemingly feeble gypsy woman trying to borrow some money. Needless to say, all hell breaks loose.
On the surface, this 1981 classic is the tale of super-evolved wolves preying on New Yorkers. Scratch a little deeper, though, and another story emerges: The tale of wealthy Manhattanites preying on poor people in the Bronx, then being themselves preyed upon by wolves. In other words, NYC in the 1970s was truly a dog-eat-dog world.
If you want another fix or two of class-based horror, check out "CHUD" and "Street Trash," both of explore the plight of New York's invisible homeless.
Sure, Stanley Kubrick's 1980 horror film is all about telepathic kids and haunted houses and elevators full of blood. But one of the first bits of fear and tension occurs in the hotel manager's office, where Jack Torrance, a recovering alcoholic who can't seem to hold onto a job, finds himself forced to beg for a gig as the winter caretaker of a resort hotel. Anybody who remembers the travails of searching for a job will recognize this truth: The nightmare isn't being trapped a haunted house -- it's having to grovel to get a job in a haunted house.
Angus Scrimm's Tall Man character is one of the more unnerving monsters in filmland: Not only does he steal the bodies of the dead, but he also steals the souls of towns. As Reggie and Mike travel cross country, it isn't hard to pick up his trail -- they just have to look for boarded-up stores, deserted streets and abandoned homes. Of course, for 1988 audiences facing the effects of outsourcing, the monster emptying out their towns was a little harder to explain.
For another take on the "monsters-as-suburban-economics" metaphor, take a peek at "Poltergeist." Between the unethical developer who didn't bother to relcoate a graveyard and the mindless TV that saps your soul, the Tobe Hooper classic manages to hit a host of cultural touchstones!
A whole subset of horror films is dedicated to rural families living off the land ... and the miserable travelers who happen across their path. It isn't hard to see why it might be an attractive premise: After all, there's no lack of people clinging to the bottom rung of the economic ladder, and it isn't hard to imagine that they may be one paycheck away from having to make their own clothes and hunt their own meat. What happens afterward ... well, that's where it gets really ugly.
If you want even more tips on living off the land (and curious teenagers), you might check out "The Hills Have Eyes," "Wolf Creek" and "Mother's Day." For a funny take on the same premise, try "Tucker and Dale Versus Evil."