The US economy reported surprisingly good growth rate in the third quarter, although the country was seriously hit by hurricanes Harvey and Irma at the end of the summer. The country’s gross domestic product rose in the July-September by 3% yoy, following a good growth of 3.1% in the second quarter. The preliminary data from the Department of Trade are better than expected in financial markets to slow economic expansion in the third quarter to 2.5%.

It is not possible to assess the overall negative impact of hurricanes Harvey and Irma on US GDP, but the preliminary estimates show that they have caused losses of privately owned fixed assets of about 121 billion USD and government-owned fixed assets for about 10.4 billion USD.

In the quarter, the consumer spending, which accounted for more than 65% of US economic growth, rose by 2.4% after a strong growth of 3.3% in the second quarter. But this delay is most likely due to the hurricanes Harvey and Irma. At the same time, business investment for non-residential construction increased by 3.9%, while housing construction contracted by 5.2%. Business equipment costs, however, maintain a robust growth rate of 8.6% after an increase of 8.8% in the second quarter.

The Commerce Department reported an increase in US exports in the third quarter by 2.3%, while imports contracted by 0.8%.

This resulted in a smaller trade deficit and contributed 0.41 percentage points to GDP growth.

The consumer price index, which is closely monitored by the Federal Reserve as a measure of inflation, rose in the third quarter by 1.5% yoy after anemic 0.3% in the previous three months. The rise in the core price index (excluding volatile food and energy prices) accelerated to 1.3% to 0.9% in the second quarter. This data is evidence that US inflation is beginning to gain momentum in late summer and early autumn.

Today’s stronger-than-expected US economy performance report in the third quarter is likely to contextualize expectations that the Federal Reserve will raise its key interest rates at its last December meeting in December.