The U.S. economy grew more rapidly than expected in the third quarter, helping produce its best six-month performance since 2003.
Gross domestic product expanded at a seasonally adjusted annual rate of 3.5% in the three months ended Sept. 30, the Commerce Department said Thursday. Economists expected 3% growth, according to the median forecast from Action Economics’ survey.
Business investment, exports and federal government spending drove growth.
The showing marks a slowdown from the second quarter’s 4.6% growth pace, but that was a period aided by a strong rebound in activity after harsh winter weather caused the economy to shrink 2.1% in the first quarter.
Economic growth has now exceeded 3% in four of the past five quarters after rising slightly more than 2% through most of the five-year-old recovery.
Business investment increased at a solid 5.5% rate, though it slowed from the second quarter’s 9.7%. Equipment spending increased 7.2%.
Federal government outlays surged 10%, including a 16% jump for defense, after falling 0.9% in the second quarter.
“After being such a massive drag on the economy in recent years, the public sector is now a big positive,” economist Paul Ashworth of Capital Economics wrote in a note to clients.
Exports rose 7.8%, compared to 11.1% increase in the second quarter. Falling imports narrowed the U.S. trade deficit, which supports growth.
Consumer spending, which accounts for more than two-thirds of the economy, increased 1.8%, slowing from 2.5% in the previous quarter. Many economists expect falling gasoline prices to bolster consumption in the current quarter.
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SOURCE: Paul Davidson
USA TODAY
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