Ringing tills and roaring domestic output augur well for next year Government figures yesterday confirmed the US economy grew at its fastest rate in nearly 20 years in the third quarter, boosted by robust consumer spending that carried on into the closing months of the year. The Commerce Department said gross domestic product, which measures total output within US borders, advanced at an 8.2 per cent annual rate - the same rate as the department estimated a month ago and more than double the 3.1 per cent pace posted in the second quarter. The robust third-quarter economic performance was in line with Wall Street analysts' expectations and stirred scant reaction in financial markets. While growth is forecast to slow to about half the third-quarter rate during the final quarter of the year, that is still a healthy pace of expansion and one which is predicted to be sustained or to accelerate moderately next year. Corporate profits after taxes advanced at a solid 10.1 per cent annual rate, down slightly from a 13.8 per cent in the second quarter. A separate Commerce Department report underlined the economy's momentum in the waning months of the year, showing consumer spending grew 0.4 per cent last month to a seasonally adjusted annual rate of US$7.9 trillion after gaining 0.1 per cent in October. Incomes rose a solid 0.5 per cent to an annual rate of US$9.3 trillion after a smaller 0.3 per cent rise in October. Companies' inventories fell US$9.1 billion in the third quarter, double the $4.5 billion decrease in the second quarter. Coupled with strong consumer spending, this may imply that companies are being forced to meet demand from current production, increasing the likelihood they will have to increase output. 'At the margin, that points to an even greater need to rebuild inventories, which will tend to support output going forward,' said economist Jade Zelnik, of RBS Greenwich Capital markets. David Durant, an economist with Bank Julius Baer in New York, said the rise in incomes last month meant consumers should continue to have spending power as the year ends. 'The faster income rise, the better spending will be,' Mr Durant said. 'But income rising faster than spending is good for the future, which shows a firming of the economy.'