U.S. economic growth slowed to 1.9% in the third quarter, dampened by a dip in business investment and federal spending, the Commerce Department said Wednesday.
Although the economy has lost speed this year, falling from 3.1% in the first quarter, the latest figures topped economists' forecasts of 1.6% growth and will allay concerns that growth is in danger of stalling.
Despite the slowdown this year, the S&P 500 reached a new high earlier this week, while consumer confidence remains strong.
The report is the last major piece of economic data that will be studied by the Federal Reserve before its latest policy meeting concludes later today. The U.S. central bank is widely expected to announce its third interest rate cut of the year.
"This report takes on elevated significance because it will be the last significant economic data the FOMC will see before concluding its meeting on Wednesday afternoon," Deutsche Bank senior U.S. economist Brett Ryan wrote in a research note. "While the Fed is widely expected to lower interest rates by 25 basis points, these data could impact the tone of the post-meeting statement and Fed Chair Powell's press conference."
The labor market offers another sign the economy is holding steady. A report released Wednesday by payroll processor ADP showed that private employers added 125,000 jobs in October, above analyst forecasts of 110,000.
The U.S. Labor Department is scheduled to release its latest employment report on Friday, although those figures could be skewed by the recently concluded General Motors strike.
2020 looking weaker
Still, the economic cooldown this year raises questions heading into 2020, experts said. Growth could slow from an annual rate of about 2% to 1.6% next year as businesses cope with lower profitability, which could depress hiring and hurt consumer confidence, Gregory Daco, chief U.S. economist at Oxford Economics, said in a research note.
"With the U.S. economy no longer fiscally insulated and businesses feeling the pinch from squeezed profit margins, economic momentum is poised to slow into 2020," Daco said.