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The U.S. economy grew at a solid 3.2% annual rate from July through September, slightly slower than previously estimated but still enough to give the country the best back-to-back quarterly growth rates in three years.

The figure was revised down from last month’s estimate of 3.3%, the Commerce Department reported Thursday. The change reflected a bit less spending by consumers, which was offset somewhat by increased spending by state and local governments.

Still, the 3.2% growth followed a 3.1% gain in the second quarter, the first consecutive quarters that growth has topped 3% since 2014.

President Donald Trump has pointed to these gains as evidence his economic program is producing results. Many economists believe GDP growth this quarter could hit 3% or better.

Read: Fed leaves key rate unchanged but hints at future hikes

Congress this week passed a major tax overhaul, giving Trump the biggest legislative achievement of his first year in office. Economists believe the proposal will boost growth temporarily in 2018 and possibly 2019. But then they forecast that the positive effects will fade, with slower growth going forward due to higher interest rates stemming from the bigger government deficits.

But at the moment, economists are optimistic about growth prospects. If GDP hits 3% this quarter, it would mark the first time that has occurred since three quarters in late 2004 and early 2005.

For the whole year, the economy is expected to grow around 2.3%, a marked improvement from the slight 1.5% gain in GDP in 2016. For 2018, economists believe growth will be even better, helped by the boost from the Republican tax cuts and a stronger global economy.

Read: U.S. GDP in last two quarters best since 2014

Mark Zandi, chief economist at Moody’s Analytics, is forecasting growth of 2.9% for 2018, reflecting tax cuts that he predicts will add 0.4 percentage point to GDP next year. He expects the tax cuts to add 0.2 percentage point to growth in 2019. But even with that boost, he sees GDP slowing to a 2.2% rate in 2019 before slowing to 1% growth in 2020 as the higher interest rates drag on growth.

This forecast is in line with other analysts who see only a temporary gain from the tax cuts. They are at odds with forecasts of the Trump administration that the tax cuts will spur significant momentum that will lift the economy to sustained annual GDP gains of 3% or better.

The report on third-quarter growth was the government’s third and final look at the quarter. The economy showed resilience last quarter in the face of two hurricanes: Harvey, which hit Texas in late August, and Irma, which battered Florida in September.

The U.S. economy is benefiting from a pickup in global growth, a healthy job market, which supports consumer spending, and a drop in the value of the dollar against other major currencies, which makes U.S. products less expensive in foreign markets.

What you need to know:

—Business investment in equipment shot up at a 10.8% rate, the best showing since the third quarter of 2014.

—Consumer spending, which accounts for about 70% of U.S. economic output, grew at an annual pace of 2.2%, a slight 0.1 percentage point less than last month’s estimate.

—Government spending and investment rose for the first time in three quarters, with spending by state and local governments revised to a small positive from a slight negative in the previous report.

—Housing construction fell for a second quarter, but the drop was not as severe as previously reported.

—The 1.5% annual GDP gain last year was the weakest performance in six years, since the economy contracted by 2.9% in 2009.

—GDP growth has averaged around 2% in the current recovery, which is now in its ninth year and is the third longest in U.S. history.

Originally published on Advisor.ca
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