Roundup: U.S. economy expands at slower pace in Q3

The U.S. economy expanded at a slower pace in the third quarter, as business inventories are dragging the economy.

The gross domestic product (GDP) grew at an annual rate of 1.5 percent in the third quarter, down from the revised 3.9-percent increase in the second quarter, the U.S. Commerce Department said Thursday.

On a year-on-year basis, the economy increased 2 percent in the third quarter, the slowest expansion since the first quarter of 2014.

According to the Commerce Department, the slower growth in the third quarter mainly reflected a downturn in private inventory investment and slowdown in exports, consumptions and state and local government spending.

In the third quarter, private inventories dragged the economic growth down by 1.44 percentage points, compared to a contribution of 0.02 percentage point in the second quarter.

Consumer spending, which accounts for about 70 percent of the U.S. economy, rose 3.2 percent, lower than the 3.6-percent growth in the second quarter.

In recent speeches, some U.S. Federal Reserve officials expected a slower growth in the second half of this year.

New York Fed President William Dudley said in mid-October that recent data suggest that the economy is slowing, as inventories, dollar appreciation and sluggish global growth are holding the U.S. economy back.

Fed Vice Chairman Stanley Fischer quoted private forecasters as saying that the economy is expected to rise at a pace of around 2 percent in the second half of this year, lower than the 2.3-percent pace in the first half.

The Fed on Wednesday described the economy as expanding at a moderate pace and leaving the door open for a rate hike at the next meeting in December without providing firm commitment at the end of the year.

The central bank also downplayed recent slower job gains, saying that underutilization of labor resources has diminished since early this year.

The United States added only 142,000 jobs in September, less than expected, and the Labor Department also revised down job gains in the previous two months, triggering market concerns on whether the U.S. economy is running in a healthy trajectory.

Fed officials, including chair Janet Yellen, have signaled that it will be appropriate to raise the interest rate this year as the job market continues to improve.

However, the inflation rate, the other mandate for the Fed, has been below the central bank's 2-percent target for years. The low inflation has been one of the reasons why some Fed officials want to wait a little bit longer before raising the rates. Endi