GDP Growth Beats Fore­cast On Spend­ing, In­ven­to­ries

The Bond Buyer - - Market News -

The U.S. econ­omy ex­panded at a 3.5% pace in the third quar­ter as con­sumers opened their wal­lets, busi­nesses re­stocked in­ven­to­ries and gov­ern­ments boosted spend­ing, mark­ing the strong­est back-to­back quar­ters of growth since 2014.

The an­nu­al­ized rate of gains in gross do­mes­tic prod­uct com­pared with the 3.3% me­dian es­ti­mate in a Bloomberg sur­vey and fol­lowed a 4.2% ad­vance in the prior three months, ac­cord­ing to Fri­day’s re­port from the Com­merce Depart­ment.

Con­sumer spend­ing, which ac­counts for about 70% of the econ­omy, un­ex­pect­edly ac­cel­er­ated to a 4% in­crease — the best since 2014 — while the 0.8% gain in non­res­i­den­tial busi­ness in­vest­ment was the weak­est in al­most two years. In two volatile cat­e­gories, in­ven­to­ries pro­vided the big­gest con­tri­bu­tion since early 2015, while the drag from trade was the largest in 33 years. Govern­ment spend­ing rose by the most since 2016.

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