Associated Press Hunter Harvey, 2, helps his dad, C.J., wheel a big-screen TV at Target in Wilmington, Mass., on Friday. On Tuesday, the Commerce Department reported consumer spending grew 2.8 percent in the July-September quarter.
Tuesday, November 29, 2016 10:01 pm
Economy outperforms estimates
MARTIN CRUTSINGER | Associated Press
WASHINGTON – The U.S. economy in the third quarter grew at the fastest pace in two years, with a revised report showing stronger consumer spending than first estimated.
The gross domestic product, the country’s total output of goods and services, expanded at an annual rate of 3.2 percent in the July-September period, the Commerce Department reported Tuesday. That is up from a previous estimate of 2.9 percent.
The revision was significantly better than the meager gains of 0.8 percent in the first quarter and 1.4 percent in the second quarter when the economy was being held back by a strong dollar and weak business investment.
The 3.2 percent increase was expected to be the best showing for the year. Economists believe growth has slowed to around 2 percent in the current quarter. At the moment, they forecast growth of around 2 percent to 2.5 percent for 2017.
But analysts caution that the outlook for next year could shift significantly based on policy changes – such as tax cuts and higher trade tariffs – that President-elect Donald Trump has promised to implement.
"Uncertainty regarding our forecasts is higher than usual given expected fiscal and trade policy changes under the new administration," said Barclays economist Blerina Uruci.
The latest look at GDP, the second of three estimates from the government, showed that consumer spending grew at a 2.8 percent rate in the third quarter, better than the 2.1 percent advance first estimated. The new-found strength reflected more spending than initially thought in such areas as auto purchases and utility bills. Still, consumer spending, which accounts for 70 percent of economic activity, slowed from a gain of 4.3 percent in the second quarter.
Other areas of strength were in export sales, which grew at a 10.1 percent rate. Although the figure partially reflected a temporary surge in exports of soybeans, economists are hopeful that exports will show further gains in the months ahead. Earlier in the year, American manufacturers were battered by a strong dollar which made their goods more expensive on overseas markets.
For the year, the economy is expected to grow a modest 1.5 percent, down from 2.6 percent growth in 2015.