The U.S. economy grew at an annual rate of 3.5 percent in the third quarter this year, down from 4.2 percent in the previous quarter, the U.S. Commerce Department reported on Friday.

Personal consumption expenditures, which account for more than two thirds of the overall economy, grew at an annual rate of 4 percent in the third quarter, up from 3.8 percent in the second quarter, according to the department.

However, non-residential fixed investment, a measure of corporate spending on structures and equipment, increased by only 0.8 percent in the third quarter after rising 8.7 percent in the previous three months.

While U.S. exports declined 3.5 percent in the third quarter, imports rose 9.1 percent as American importers stepped up on purchases of foreign goods. The widening trade gap subtracted about 1.78 percentage points from GDP growth in the third quarter.

Analysts said the strong economic growth in the third quarter would keep the Federal Reserve on track to raise interest rates once more this year. The U.S. economy is likely to slow further in the next few quarters as the fiscal stimulus gradually fades and the Fed continues raising rates.

Leading global hedge fund company Bridgewater recently warned that the U.S. economy faces a looming deceleration as tighter monetary policy starts to weigh on growth and ratchet up pressure on financial markets.

"We are at a potential inflection point where the economy is moving from hot to mediocre," said Bob Prince, co-chief investment officer at Bridgewater.

Prince believed that the recent market turmoil was triggered by investors realizing that this year's strong economic growth and robust corporate earnings were "likely peaking" as interest rates rise and the boost from tax cuts fades.

The Fed last month expected the U.S. economy to grow at 2.5 percent in 2019 and 2 percent in 2020 after expanding at 3.1 percent in 2018.