The Commerce Department reported Friday that the U.S. economy grew at an annualized rate of 2.9 percent in the third quarter, beating economists expectations of 2.5–2.6 percent GDP growth, lead primarily by an increase in soybean exports.
Consumer spending, which accounts for two-thirds of America’s economic activity, only increased by 2.1 percent, less than estimated and down from 4.3 percent in the second quarter.
However, U.S. exports grew by 10 percent, the largest increase since 2013, adding .83 percent to the bottom line GDP growth number. Experts caution though that growth in soybean sales overseas could slow in the fourth quarter, which began Oct. 1, but consumer goods and capital exports could continue to grow.
Inventory investment by U.S. businesses also increased to $12.6 billion in the period between July and September, adding .61 points to Q3 GDP. Commercial and industrial infrastructure spending rose by 5.4 percent, compared to −2.1 percent in Q2.
“The economy is good but not great,” said economist Stephen Stanley of New York-based Amherst Pierpont Securities LLC. “The economy is going to continue to rise and fall with the consumer, and the best news there is that the underlying fundamentals are strong.”
While the latest data from the Bureau of Labor Statistics shows U.S. unemployment at 5 percent in September — down from a high of 10 percent in October 2009 — residential construction fell by 6.2 percent in Q3, the second consecutive quarter in which new home building has decreased.
Friday’s economic report bodes well for Hillary Clinton and congressional Democrats election odds, but two more revisions to the Q3 GDP growth number will be released in November and December when more data is available.
Increased economic growth also points to the likelihood of an interest rate hike by the end of the year. The Federal Reserve Board is scheduled to meet at the beginning of November to discuss borrowing costs but a move to increase the overnight lending rate is not expected until December.
[CNBC] [Bloomberg] [Photo by Reuters via BBC]