The economy expanded at its fastest pace in more than a
decade during the spring and summer, showing the U.S. has strengthened its
economic footing despite increasing global uncertainty. Gross domestic product,
the broadest measure of goods and services produced across the economy, grew at
a seasonally adjusted annual rate of 3.9% in the third quarter.
The upward revision from a first estimate of 3.5% put the
combined growth rate in the second and third quarters at 4.25%, affirming the
best six-month pace since the second half of 2003. The output figures are
inflation adjusted.
While U.S. gains have been modest compared with previous
expansions, domestic growth is outpacing other advanced economies. Japan’s
economy slipped into a recession in the third quarter and the eurozone’s growth
barely stayed positive. The rate of growth in emerging markets from China to
Brazil is also slowing.
Some firms are seeing that disparity first hand. OptiLedge
LLC, a Georgia company that produces plastic devices that replace wooden
pallets, is seeing better demand this year from U.S. customers, including
retailers and manufacturers. And lower resin costs, thanks to falling oil
prices, are supporting profits.
But the global economy is a concern for OptiLedge. A
stronger dollar is cutting margins on shipments to a large Canadian customer
and sales to Asia have slowed.
The upward revision to overall growth, driven by stronger
consumer and business spending and a smaller drag from inventory investment, surprised
economists who had expected quarterly GDP would be marked down.
The economy has grown at a 3.5% pace or better in four of
the past five quarters, the one exception being the first quarter’s wintry 2.1%
contraction, the worst decline on record outside of a recession. From a year
earlier, economic output expanded 2.4% in the third quarter. The rate is essentially
in line with the just-above 2% growth recorded since the economy emerged from
recession in the second half of 2009.
The third-quarter growth revision was supported by several
factors.
Consumer spending, rising at a 2.2% pace, was better than
initially estimated as businesses didn’t allow stockpiles to dwindle as much as
first thought. Those factors, combined with falling gasoline prices, point to
the potential for strong momentum for shoppers heading into the holidays.
Business spending on new buildings, machinery and
research-and-development efforts grew more than initially estimated, and
spending on residential building and improvements advanced for the second
straight quarter after slowing late last year.
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