US growth shows sharp increase
THE world’s largest economy grew even faster than initially thought in the third quarter, based in large part on a jump in spending, the US Commerce Department said.
According to a revised GDP report, the economy grew at an annual rate of 3.2 percent, three-tenths higher than the initial estimate published last month, which was already the fastest rate in two years.
A consensus forecast had called for a more modest upward revision to 3pc, from the 2.9pc initial estimate. The results showed an even more emphatic upswing at the start of the second half of 2016. Anaemic growth in the first half helped convince US monetary policymakers to forego a planned course of interest rate hikes during the year.
However, the US Federal Reserve is widely expected to increase rates from their historically-low levels when it meets next month.
Based on a more comprehensive set of data, the revised GDP showed US consumers spent more on construction for single-family housing, while investment in non-residential structures was revised upwards to 10.1pc from 5.4pc.
In a statement, the White House noted that economic conditions abroad had not held back foreign sales, but acknowledged some temporary factors pushing exports.
“Exports, which have faced substantial headwinds in recent years from slow growth abroad, grew at an annual rate of 10.1 percent in the third quarter, boosted in part by transitory factors,” said Jason Furman, chair of the Council of Economic Advisors.
The data showed spending on durable goods rose 2.8pc over the second quarter, 0.7 points more than previously estimated.
Sharp gains in consumer spending on auto parts and retail sales in “other” non-durable goods, also boosted growth.
The consumption expenditures price index was unchanged at 1.4pc.
Jim O’Sullivan of High Frequency Economics cautioned against putting too much confidence in the upward revisions, saying the strength of the economy appeared “exaggerated”.
“We don’t think the underlying trend has suddenly moved up sharply,” he said. “Still, there is certainly no sign of weakening.”
Consumer confidence also rebounded in November, returning to pre-recession levels, driven by renewed optimism in the economic outlook, the Conference Board said.
The consumer confidence index jumped nearly seven points to 107.1, well above the forecast. The index stood at 111.9 in July 2007, prior to the outbreak of the financial crisis.
Lynn Franco, director of economic indicators at the Conference Board said, “A more favourable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence.”
Confidence in the present situation jumped 7 points, and the expectations index rose nearly 6 points.
Ms Franco said that while most consumers were surveyed before the presidential election “it appears from the small sample of postelection responses that consumers’ optimism was not impacted by the outcome”.
For the holiday shopping season “a more confident consumer should be welcome news for retailers”.
The view of current business conditions showed a slight uptick with 29.2pc perceiving conditions as “good” compared to the prior month, and a decline in those who think the situation is “bad”. –