Economic growth was faster in the third quarter than initially thought.
U.S. gross domestic product in the quarter grew at a 3.2 percent annual pace, the Bureau of Economic Analysis reported Tuesday, rather than the 2.9 percent originally estimated, thanks to greater consumer spending than originally measured.
Even before Tuesday’s revisions, third-quarter GDP was a marked improvement over recent growth. GDP growth had been just 1.4 percent in the second quarter.
The third quarter’s 3.2 percent growth rate, which is adjusted for seasonal variations, is the fastest in two years.
With the economy expanding at a healthy clip and the unemployment rate at 4.9 percent, it appears that President-elect Trump is likely to inherit a nearly healthy economy from President Obama.
“There is certainly no sign of weakening,” High Frequency Economics forecaster Jim O’Sullivan wrote in reaction to the release. “The data reinforce the impression that the trend in growth remains strong enough to keep the labor market improving.”
Tuesday’s news also helps clear the way for the Federal Reserve to raise interest rates and tighten monetary policy at its next meeting in mid-December. Such a rate hike, which is now expected by investors, would be only the second rate increase from the central bank in the eight years after it lowered rates to zero during the financial crisis.
The acceleration in GDP in the third quarter was driven by greater federal government spending and more exports, according to the Bureau, as well as by an increase in business inventories, which are generally not predictive of future growth.
