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Everyone hoping for the U.S. economy to perform well had to be cheered by this morning’s look at economic growth in the third quarter – the second of three such reports on the time period for the near future. And special bonus: The results significantly strengthen the case that the United States can absorb hits from even a long China trade conflict with room to spare.       

On top of beating expectations on its headline figure (which showed 2.11 percent annualized inflation-adjusted growth for July through September), a key internal indicator showed unexpectedly showed improvement as well – business investment.

What companies spend on plant, equipment, computers, research and development and the like is always closely watched because increases on these scores are (rightly) deemed the healthiest source of growth and better living standards. More recently, it’s been (rightly) seen as a test of the Trump tax cuts (which were mainly aimed encouraging such expenditures) as well as (less clearly) of the Trump trade policies (because of how they’re supposedly paralyzing corporate executives with uncertainty). And the results so far this year on the “capex” (capital – or business – spending) front certainly have been worse than last year’s excellent performance.

According to the new GDP report, real “non-residential fixed investment” still declined sequentially for the second straight quarter. But the decline was less (0.67 percent) than first estimated (0.75 percent). At the same time, pessimists could point out that the second quarter’s dip was considerably smaller (0.26 percent), so it remains far from clear that this valued growth engine is out of the woods.

Superficially, the trade results as such of the new GDP read looked poor as well, as the after-inflation overall deficit hit a new record. At an annualized $988.3 billion, it bested the previous all-time high of 983.0 billion of last year’s fourth quarter, and the $986.4 billion figure from last month’s first estimate of third quarter growth.

Think a bit, though, and the impact of Boeing’s aircraft safety woes represent a big part of the explanation – and a big part that can’t be blamed on President Trump’s tariffs-heavy trade policies. And even given the near halt in orders of its popular but troubled 737 Max model, the new numbers for total after-inflation total U.S. exports were slightly higher than those of the third quarter’s first read ($2.5231 trillion annualized versus $2.5222 trillion) and those of the second quarter ($2.5175 trillion).

Moreover, the “Boeing effect” apparently will need to be kept in mind a good deal longer, as suggested by this new report of major problems with another popular model.

Nevertheless, even constant-dollar merchandise (goods) exports keep trending up. True, at $1.7842 trillion annualized as of this morning, they remain less than the quarterly record of $1.8141 trillion, set in the second quarter of last year. But the new results exceeded those both for the second quarter ($1.753 trillion) and for the third quarter’s initial estimate ($1.7823 trillion).

Further, some more of the recent weakness in U.S. trade accounts looks attributable to another sector of the economy that has little or nothing to do with the trade wars, either – at least not directly, in the sense of provoking retaliatory tariffs. That’s America’s services trade.

The new GDP report’s statistics on these trade flows were worse than those of the second quarter and of the first third quarter estimates both on the exports side and on the imports side. Indeed, price-adjusted services exports fell deeper into worst-since-the-second-quarter-of-2017 territory (coming in at $745.7 billion annualized versus the earlier number of $740.7 billion. And at $563.5 billion, real services imports rose higher into all-time record territory (with the second worst such total being the $558.1 billion during the first quarter of this year).

Since President Trump has blown so hot and cold on his China tariffs – and shows signs of doing the same on threatened separate automotive tariffs – Washington-related trade developments seem likely to keep distorting the GDP figures (including by inhibiting some business investment) and the trade figures for the foreseeable future no matter what happens with Boeing or U.S. services industries.

At the same time, the new GDP report underscores a point often lost in the understandable and volatile flood of headlines and forecasts: Even though changing the fundamental course of American trade policy is a thoroughly disruptive undertaking, with transition-related efficiency-reducing adjustments inevitable, the U.S. economy looks to be passing this test, including with China, pretty handily.  Better still:  Modest signs of further improvement are visible. In other words, and especially considering the failure of pre-Trump approaches, there’s here’s every reason for the President to stay his new course on trade.

And one more point:  If we don’t communicate before, Happy Thanksgiving to you and yours!