Economy grew 3.5 percent in the third quarter

The U.S. economy grew at a 3.5 percent annual clip in the third quarter, slower than the spring but still a good sign of the nation's economic health.

Growth was slower than the robust 4.2 percent in the April to June quarter but the economy continues to show strength in the final assessment before the midterm elections in less than two weeks, the Commerce Department reported on Friday.

The two quarters are the best back-to-back showing since 2014.

Consumer spending, which accounts for more than two thirds of U.S. economic activity, grew by 4 percent in the third quarter, the strongest since the fourth quarter of 2014. The strong rise in consumer spending helped offset a 7.9 percent decline in business spending. That was the biggest quarterly decline in business spending since the first quarter of 2016.

"The headline was not too far from expectations, but we did get a few surprises. Consumer was stronger than we expected," said Scott Brown, chief economist at Raymond James. "The consumer accounts for 68 percent of overall GDP, and the consumer really drives the bus. Business to be sure, but there's got to be consumption ant the end of it."

While stronger than expected, the overall expansion was a slower pace of growth than in the previous quarter. Gross domestic product grew by 4.2 percent in the second quarter, marking the fastest quarterly expansion since the third quarter of 2014. The economy increased by 2.2 percent annual pace in the first quarter of the year.

The report comes amid growing concerns about rising interest rates slowing the economy. China and the U.S. have slapped tariffs on billions of dollars worth of goods this year, increasing fears that tighter trading conditions will slow down the global economy and eventually hit things here in the U.S.

U.S. equities have taken a beating this month into the report, with the S&P 500 falling more than 7 percent in October through Thursday's close.

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