The U.S. economy grew faster than expected in the third quarter, following strong growth in second quarter.
The Department of Commerce reported Thursday that U.S. real gross domestic product grew at a 3.5 percent annual rate in the the third quarter. Wall Street economists had expected 3 percent growth.
The gain in growth was driven in part by strong consumer spending and government outlays on defense, which contributed 0.7 percentage points to the headline growth rate.
Imports fell over the quarter. Because they are a subtraction from GDP, the drop boosted the growth rate by 0.3 percentage points.
The initial GDP report from the Bureau of Economic Analysis is subject to multiple revisions.
The underlying details of Thursday’s report were also encouraging. In particular, the slowing of inflation-adjusted growth from a 4.6 percent rate in the third quarter was largely attributable to falling private inventory spending, according to the BEA, a category that is generally not indicative of future growth.
Although growth accelerated over the summer, the year got off to a rocky start to the year with a 2.1 percent annual rate decline in the first quarter. With Thursday’s initial third quarter numbers, the economy is on track to grow at a roughly 2 percent rate.
That would be right at the lower end of Federal Reserve officials’ projections from September, although most economists predict further improvement in the fourth quarter.
Earlier in the year top policymakers such as Janet Yellen had expressed optimism about the economy growing at a 3 percent rate or higher for the year, finally breaking through the pattern of weak growth in the wake of the financial crisis.
GDP grew at 2.2 percent in 2013, and 2.3 percent in 2012.
