US economy boost after pre-election pick-up in spending
The US economy expanded more than forecast in the third quarter, paced by a pick-up in consumer and government spending along with gains in residential construction.
Gross domestic product rose at a 2pc annual rate after climbing 1.3pc in the prior quarter, the Commerce Department said.
A housing rebound is helping mend Americans' finances and confidence, indicating the pickup in demand for expensive items such as cars can be sustained. The growth figures are likely to play a role in the upcoming election, allowing President Barack Obama to say the economy is heading in the right direction, while challenger Mitt Romney may argue growth is not fast enough.
Yesterday's report will be the last reading on the state of the economy before Americans vote on November 6. Employment and growth are central themes in the campaigns ahead of the elections.
The rate of growth would have been stronger if not for the drought that affected crops in the midwest. A drop in farm inventories subtracted 0.4 percentage points from third-quarter GDP.
Consumer spending, the biggest part of the US economy, grew at a 2pc annual rate and added 1.4 percentage points to growth.
Retail sales in September and August had the best back-to- back showing since late 2010 as shoppers snapped up goods from cars to Apple's iPhones.
Cars and light trucks sold at a 14.9 million annual pace in September, the strongest since March 2008.
Record-low mortgage rates are stoking demand for housing, another area of the economy that's improving. Firming home prices and a drop in joblessness may further boost Americans' confidence and spending.
Spending by the federal government also rebounded, led by a jump in defence.
It grew at a 9.6pc rate, the most since the second quarter of 2010.
Total public expenditures climbed at a 3.7pc pace, the most in three years.
Corporate spending on equipment and software was unchanged, the weakest reading in three years, yesterday's report showed.