US economy growing at fastest pace in two years
The US economy grew at its fastest pace in almost two years in the third quarter, the government said yesterday as it revised its estimates of business and consumer spending higher.
The broad revisions hinted at some underlying strength, which could help the economy better absorb the blow from an anticipated cutback in inventory accumulation this quarter.
The Federal Reserve on Wednesday gave the economy a vote of confidence, announcing it would reduce its $85bn (€62bn) monthly bond purchases by $10bn starting in January.
Gross domestic product grew at a 4.1pc annual rate instead of the 3.6pc pace reported earlier this month, the Commerce Department said in its third estimate.
That was the quickest pace since the fourth quarter of 2011 and an acceleration from the April-June quarter's 2.5pc. Economists had expected third-quarter GDP growth would be unrevised at a 3.6pc rate.
"This is a fairly solid report," said Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania, adding that the mix of factors in the report was more positive than expected.
"At first it was an inventory story. Now with this mix, it is favourable for the fourth quarter and into early 2014."
Business spending increased at a 4.8pc rate instead of the 3.5pc pace reported early this month. That reflected stronger growth in intellectual property products such as software, research and development, and entertainment.
There were also upward revisions to consumption. Consumer spending, which accounts for more than two-thirds of US economic activity, was raised 0.6 percentage points to a 2pc rate.
Revisions to spending on gasoline and other energy goods accounted for part of the upward revision to spending on goods, while spending on healthcare and other services also was higher than previously estimated. (Reuters)