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The economy grew at the fastest pace in over two years in the third quarter as consumers and government stepped up their spending and exports surged.
Gross domestic product expanded at a 3.2% annual rate in the Commerce Department’s second reading, released Tuesday. That is the strongest pace since the second quarter of 2014. It beat the consensus estimate of a 3.1% growth rate among economists surveyed by MarketWatch.
Consumer spending rose 2.8% in the quarter, stronger than the original estimate of 2.1%. The consumer sector accounts for two-thirds of the economy, and that has been bolstering economic growth for several quarters.
“I was willing to entertain the possibility that as energy prices rose, real spending would moderate a tad,” wrote Stephen Stanley, chief economist for Amherst Pierpont Securities, in a research note Tuesday. “However, just when the data seemed to be pointing in that direction (with the 2.1% Q3 initial print), we learn that in actuality, spending increased at close to the 3% clip in the summer after all.”
With wages and salaries growing at an annual 6.7% pace, Stanley noted, “the consumer is likely to continue to spend for the foreseeable future. The fundamentals for the household sector are as good as I’ve seen in quite some time.”
Another big contribution to the economy was business investment in structures like offices and factories, which expanded at a 10.1% pace, faster than the initial estimate of a 5.4% clip. Exports were marked up slightly, to a 10.1% gain from 10.0%, largely thanks to a surge in soybean exports. Exports of goods are at the strongest in three years. Imports, which detract from overall GDP growth, were marked down slightly, to a 2.1% gain from 2.3%.
Given the quirks involved in GDP calculations, some economists prefer to track gross domestic income. That measure was up 5.2% in the third quarter, the government said. A measure of core inflation, which excludes volatile categories like food and energy, rose 1.7% during the quarter, unrevised from the initial reading. That is inching closer to the Federal Reserve’s 2% target. Most economists and investors expect the central bank to raise the benchmark interest rate at its December meeting as inflation firms and economic growth remains sturdy.
(From MarketWatch, November 30, 2016)
This is excellent news as we have seen the economy stabilize and grow significantly since 2009. We dont know how the election will alter this growth pattern, but we stand to see progress for the near future continue.
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