US grows at fastest pace in over 2 years in Q3

Reuters
The US economy grew at its fastest pace in more than two years in the third quarter, powered by robust business spending
Reuters

The US economy grew at its fastest pace in more than two years in the third quarter, powered by robust business spending, and is poised for what could be a modest lift next year from sweeping tax cuts passed by Congress this week.

Other data yesterday showed a jump in the number of Americans filing for unemployment benefits last week. The underlying trend in jobless claims, however, remained consistent with a tightening labor market.

Gross domestic product grew at a 3.2 percent annual rate last quarter, the Commerce Department said in its third GDP estimate for the period. While that was slightly down from the 3.3 percent reported last month, it was the quickest pace since the first quarter of 2015 and rose from the second quarter’s 3.1 percent growth rate.

It also marked the first time since 2014 that the economy experienced growth of 3 percent or more for two straight quarters. But the expansion in the July-September period likely overstated the health of the economy.

An alternate measure of growth, gross domestic income, rose 2 percent in the third quarter. GDI was previously reported to have risen at a 2.5 percent rate.

The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic growth, added 2.6 percent instead of the previously reported 2.9 percent.

Growth in the third quarter was also boosted by an accumulation of unsold goods and a rebound in government investment. Growth in business investment in equipment was raised to 10.8 percent, the fastest in three years, from the previously reported 10.4 percent.

Growth in consumer spending, which accounts for more than two-thirds of the US economy, was revised down by one-tenth of a percentage point to 2.2 percent in the third quarter. Consumer spending rose by a robust 3.3 percent in the second quarter.

The government said after-tax corporate profits surged 5.7 percent last quarter instead of the previously reported 5.8 percent. Profits rose at only 0.1 percent in the second quarter. Undistributed profits jumped 13.9 percent after declining for two straight quarters, suggesting that companies were anticipating deep tax cuts.



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