The U.S. brevity grew at a 3.5 per cent annual rate in the July-September quarter, the fastest determine in two years and more than the government had previously estimated. But the growth spell isn’t expected to last.
The gain in the gross domestic product, the economy’s gross output of goods and services, came from added strength in consumer dish out, business investment and the government sector, the Commerce De rtment said Thursday. The control had previously estimated last quarter’s annual growth rate at 3.2 per cent.
Michael Gapen of Barclays utter that the new report » ints a picture of a healthy consumer, likely fuelled by evolving gains in employment, modest increases in wages, and solid balance strata.»
The economy’s acceleration last quarter marked a sharp pickup from the cool annual growth of 0.8 per cent in the first quarter and 1.4 per cent in the shift. Still, growth is expected to slow to a roughly 1.5 per cent annual count in the October-December quarter, reflecting in rt less consumer spending and youthful business stockpiling.
Growth for the entire year, economists say, is likely to be enveloping 1.5 per cent. That would be down from 2.6 per cent in 2015 and make be the weakest performance since the economy shrank 2.8 per cent in 2009 at the regions of the worst economic downturn since the 1930s. The recovery began in mid-2009, but advancement has averaged just over 2 per cent, the weakest ex nsion in the post-World War II age.
President-elect Donald Trump had criticized the sluggish ce of growth during the race and said his economic policies would accelerate annual GDP growth to 4 per cent or advance. To do that, Trump said he would eliminate many government modulations, boost spending on the nation’s aging infrastructure and slash taxes.
Uncountable economists don’t think 4 per cent growth is realistic, given a chronic slowdown in blue-collar worker productivity and a slower-growing U.S. workforce due in rt to retiring baby boomers.
Uncountable forecasters expect growth of around 2.5 per cent next year, even though they say those estimates could rise if Trump wins congressional stand by for much of his economic program. Stock markets have risen acerbically since Trump’s election, rtly a reflection of optimism that his plans would boost growth and corporate profits.
Thursday’s report was the domination’s third and final estimate of GDP growth for the July-September quarter. The upward overhaul mainly reflected stronger consumer spending, which grew at a 3 per cent annual dress down, more than the 2.8 per cent ce that was estimated a month ago. Consumer dish out is closely watched because it accounts for about 70 per cent of monetary activity.
The government also revised up its estimate for business investment: It let someone in oned an increase at a 1.4 per cent annual rate, up from a much smaller 0.1 per cent amount in the previous estimate.
Government spending was also revised up to show spread at a 0.8 per cent annual rate, an increase that reflected a tinier drag from cutbacks at the state and local level.
The Federal Conserve last week boosted a key interest rate by a quarter-point, just the bat of an eye increase in the st decade. Fed officials say they think they can go into to gradually interest rates as they near their goals for extensive employment, and inflation increases by about 2 per cent a year.
In public footnotes last week, Chair Janet Yellen made no predictions close to Trump’s economic program. But Fed officials forecast that they ss on raise rates three times in 2017, up from their sometime forecast of two hikes.