The US economy grew at a faster pace in the third quarter than initially thought, according to the final reading of the data by the Department of Commerce. The country’s GDP expanded by 3.5% on an annual basis for the period from July to September 2016, while the previous estimate was for growth of 3.2%. The growth was the strongest quarter for two years, beating the economists estimates for upward revision to 3.3%. During the first two quarters of the year the US economy growth rate was 0.8% and 1.4%.
The latest data observed stronger consumer spending for services and more robust business investment in buildings and intellectual property.
The economists and analysts expects the US economy to expand by 1.6% yoy in the last quarter, while the increase in 2016 will be 1.9% and 2.4% in 2017. The average rate of growth of the US economy by the end of the recession in 2009 is 2%, which is the weakest rise in times of expansion since 1949.
The first estimates for GDP growth in 2016 will be published on January 27.
The consumer spending was revised from 2.8% to 3.0% yoy, which still represents a slowdown amid 4.3% increase from the second quarter. The business costs, including investment in nonresidential fixed assets, were revised from 0.1% to 1.4%. The building costs were revised to growth of 12% and those for intellectual property to 3.2%.
The residential investment declined by 4.1% in the third quarter, suggesting a slowdown in housing construction and in their improvement. It is the sector that supports the economy during the period of expansion.
International trade and growth stock in private companies have modest contribution to the economy growth during the period from July to September. Last revised data show that the decrease in state and local spending was less than expected.
Another detail shows that the increase in corporate profits is actually less than was estimated. The profits after corrections grow by 2.6% in the third quarter rather than 3.5%. On an annual basis, corporate profits grow by 4.3%, which is the sharpest pace in two years.
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