US surprises as third quarter GDP growth hits 3.9pc
Stronger-than-expected third-quarter expansion driven by higher consumer, business spending
United States economic growth was far stronger than initially thought in the third quarter, pointing to strengthening fundamentals that should support the economy for the rest of the year.
The Commerce Department yesterday raised its estimate of gross domestic product to a 3.9 per cent annual pace from the 3.5 per cent rate reported last month, reflecting upward revisions to business and consumer spending, as well as restocking.
However, a separate report indicated softness in the housing sector, with home prices rising in September at the slowest pace in more than two years.
Still, observers are heartened by the GDP revision for the quarter. Economists had expected growth would be trimmed to a 3.3 per cent pace.
"This report will go some way in providing further confirmation about the sustainability of the current economic recovery," said Millan Mulraine, a deputy chief economist at TD Securities.
The economy had expanded at a 4.6 per cent rate in the second quarter. It has now experienced the two strongest back-to-back quarters of growth since the second half of 2003.
When measured from the income side, the economy grew at its fastest pace since the first quarter of 2012.