The U.S. economy grew at an upgraded annual rate of 3.1 percent in the spring, the fastest pace in more than two years. But growth is expected to slow sharply this quarter in the wake of a string of devastating hurricanes.
The April-June expansion in the gross domestic product — the economy’s total output of goods and services — is up slightly from a 3 percent estimate made a month ago, the Commerce Department reported Thursday. It is the strongest performance since the economy grew at a 3.2 percent pace in the first quarter of 2015. The upward revision reflected larger farm stockpiles.
The year started with a lackluster 1.2 percent gain in the first quarter. Economists believe growth has slowed again to around 2 percent in the current quarter.
The revised figure was the government’s third and final look at GDP for the April-June period, and left GDP rising at an average 2 percent pace over the first six months of the year. That matches the lackluster average annual growth rates seen since the recovery from the Great Recession began in mid-2009.
Economists at Macroeconomic Advisers believe that growth in the current quarter could tumble by as much as 1.2 percentage points due to hurricanes Harvey, Irma and Maria. But analysts think the initial losses to GDP will be made up in subsequent quarters as rebuilding gets underway.
Economists at Moody’s Analytics have estimated that hurricanes Harvey and Irma will end up costing in total around $167 billion when taking into account property damage and lost economic output. That estimate would put the two storms together close to the total devastation in 2005 caused by Hurricane Katrina, the most expensive natural disaster in U.S. history.
Top forecasters with the National Association for Business Economics expect the economy will grow a modest 2.2 percent in 2017 and 2.4 percent in 2018.
That would be up from the weak 1.5 percent growth seen in 2016 but it is far below the growth rates of 3 percent or…