third-quarter growth rate revised up to 3.9 percent
Send a link to a friend
[November 25, 2014] WASHINGTON,
Nov 25 (Reuters) - U.S. economic growth was far stronger than initially
thought in the third quarter, pointing to strengthening fundamentals
that should support the economy for the rest of the year.
The Commerce Department on Tuesday raised its estimate of gross
domestic product to a 3.9 percent annual pace from the 3.5 percent
rate reported last month, reflecting upward revisions to business
and consumer spending.
Growth had increased at a 4.6 percent rate in the second quarter.
The economy has now experienced the two strongest back-to-back
quarters of growth since 2003.
Economists polled by Reuters had expected growth would be cut to a
3.3 percent pace.
Inventories were also revised higher, with restocking now only
accounting for a mild drag to GDP growth. That also helped to offset
downward revisions to export growth.
Inventories, however, could weigh on growth in the final three
months of the year. Spending on residential construction was also
It was the fourth quarter out of the past five that the economy has
expanded above a 3.5 percent pace. Data ranging from manufacturing
to employment and retail sales suggest the economy retained some of
that momentum early in the fourth quarter.
The United States remains a bright spot in an increasingly gloomy
global economy, with Japan back in recession and growth in the euro
zone and China slowing significantly.
The U.S. GDP report also showed corporate profits after tax grew at
a 3.2 percent rate in the third quarter, slowing from the second
quarter's robust 8.6 percent pace.
The brisk economic growth pace could boost expectations the Federal
Reserve will start raising its short-term interest rate sometime in
mid-2015. The U.S. central bank has kept its benchmark lending rate
near zero since December 2008.
Underscoring the economy's firming fundamentals, growth in domestic
demand was revised up to a 3.2 percent pace in the third quarter
instead of the previously reported 2.7 percent pace.
[to top of second column]
Consumer spending, which accounts for more than two-thirds of U.S.
economic activity, grew at a 2.2 percent pace instead of the
previously reported 1.8 percent rate.
Growth in business investment was raised to a 7.1 percent pace from
a 5.5 percent rate, with a stronger pace of spending on equipment
than previously thought accounting for the bulk of the revision.
Export growth was lowered to a 4.9 percent rate from the previously
reported 7.8 percent rate, while imports were revised up. That left
a trade deficit that contributed 0.78 percentage point to GDP growth
instead of the previously reported 1.32 percentage points.
Government spending also was cut, as outlays at state and local
governments were not as strong as previously reported.
(Reporting by Lucia Mutikani; Editing by Paul Simao; Lucia.Mutikani@thomsonreuters.com;
1 202 898 8315; Reuters Messaging: email@example.com)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.