The U.S. economy grew much faster than expected in the third quarter, boosted by strong consumer spending, according to a report released late Tuesday.
Gross domestic product (GDP), the sum of all goods and services produced in the vast U.S. economy, expanded 4.3% in the July-September period, the Commerce Department said in its first estimate of third-quarter growth. Economists polled by Dow Jones expected a 3.2% rise.
Personal consumption expanded by 3.5% in the third quarter, following a 2.5% increase in the second quarter.
Increases in exports and government spending also boosted growth, as did a slight decline in private capital investment.
The report was originally scheduled to be released on October 30, but was postponed due to the government shutdown. The announcement also replaces a second estimate that was scheduled to drop on November 26th. The department’s Bureau of Economic Analysis will then release final estimates.
A measure of growth called real final sales to domestic individual buyers rose 3% in the quarter, or 0.1 percentage point from the previous quarter. Fed policymakers are closely monitoring data points for signs of consumer demand.
Despite persistent signs of inflationary pressures, the economy advanced during this period.
The Federal Reserve’s main inflation measure, the Personal Consumption Expenditures Price Index, rose 2.8% during the period, while the core, which excludes food and energy, rose 2.9%. Both are higher than prior readings of 2.1% and 2.6%, respectively, and remain well above the Fed’s inflation measure of 2%. Additionally, the chain-weighted price index, which takes into account changes in consumer behavior such as switching from more expensive items to cheaper products, rose 3.8%, one percentage point higher than expected.
Although the report was largely positive about the economy, the market had little reaction because the data was negative. Stock futures turned slightly negative, but US Treasury yields remained high.
Elsewhere in the report, corporate profits increased $166.1 billion, or 4.2%, compared to a $6.8 billion increase in the second quarter.
