US economy grew 5.2% in third quarter, more than first estimated
THE US economy grew at an even faster pace in the third quarter than originally estimated, reflecting upward revisions to business investment and government spending.
Gross domestic product rose at an upwardly revised 5.2 per cent annualised pace in the third quarter, the fastest in nearly two years. Consumer spending advanced at a less-robust 3.6 per cent rate, according to the government’s second estimate of the figures issued on Wednesday (Nov 29).
The downward revision to household outlays reflected slower growth in services spending. After a previously reported decline, business investment was revised up to a 1.3 per cent gain on the back of firmer outlays for structures. Housing was also stronger than initially reported.
The government’s other main gauge of economic activity – gross domestic income – rose a more moderate 1.5 per cent. GDI is a measure of the income generated and costs incurred from producing goods and services.
The average of the two growth measures was 3.3 per cent, more than double the average pace of the first half of the year. Even with the downward revision, consumer spending remained robust, underpinned by a resilient jobs market and a flurry of travel and events. That momentum does appear to be cooling into year-end, though it’s far from crumbling.
While data out Thursday is anticipated to show inflation-adjusted outlays rose just 0.1 per cent last month, the holiday shopping season started with a bang. US shoppers spent a record US$12.4 billion on Cyber Monday, up 9.6 per cent from a year ago, according to Adobe.
Inflation gauges
The Federal Reserve’s preferred inflation metric – the personal consumption expenditures price index – was revised down to a 2.8 per cent annual rate in the third quarter. Excluding food and energy, the gauge was also marked lower to 2.3 per cent.
The report also showed that adjusted pretax corporate profits posted the biggest increase in more than a year. The gain was fuelled primarily by the non-financial sectors, though profits also picked up at financial firms.
After-tax profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, picked up to 14.9 per cent. BLOOMBERG
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