The U.S. economy is likely growing at a 2.1% annualized rate in the third quarter, based on the latest data on economic data, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday.

That compared to a 1.9% pace estimated by the Atlanta Fed’s GDP program on Sept. 18.

The economy grew at a 2.0% rate in the April-June quarter, down from the first quarter’s brisk 3.1% pace.

"After last week's and this week's data releases by the National Association of Realtors, the U.S. Census Bureau, and the U.S. Bureau of Economic Analysis, an increase in the nowcast of third-quarter real gross private domestic investment growth more than offset a decrease in the nowcast of third-quarter real consumer spending growth," the Atlanta Fed said.

The next GDPNow update is Tuesday, October 1. 

Meanwhile, U.S. consumer spending barely rose in August and business investment remained subdued amid lingering trade tensions, prompting economists to slash their economic growth estimates for the third quarter.

The reports on Friday from the Commerce Department, however, likely do not signal a recession is looming as consumer spending remains supported by solid income growth, thanks to the lowest unemployment rate in nearly 50 years and a huge savings buffer.

But the data also showed underlying inflation perking up by the most in seven months on an annual basis in August, which economists said could put the Federal Reserve in a difficult position as it seeks to keep the longest economic expansion on record, now in its 11th year, on track.

The Fed last week cut interest rates for the second time this year, citing the ongoing risks from the Trump administration’s nearly 15-month trade war with China and slowing global growth. The U.S. central bank lowered borrowing costs in July for the first time since 2008.

“We still expect the Fed will cut rates in the fourth quarter, but squaring this soft read on the consumer, business investment and a slight rebound in underlying inflation admittedly pulls the Fed in opposite directions,” said Tim Quinlan, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month as an increase in outlays on recreational goods and motor vehicles was offset by a decrease in spending at restaurants and hotels.

Data for July was revised slightly down to show consumer spending increasing 0.5% instead of the previously reported 0.6% advance. Economists polled by Reuters had forecast consumer spending gaining 0.3% last month.

Consumer spending has been blunting some of the hit on the economy from the U.S.-China trade war, which has sunk business investment and manufacturing.