US economy spurts led by consumer and state spending increase
London, Dec. 21 (ANI)
The US economy grew faster than previously estimated in the third quarter, as consumer spending picked up and state and local governments added to growth for the first time in almost three years.
Growth in the three months to the end of September expanded at a 3.1pc annual rate, according to the Commerce Department's final estimate.
This was revised up from a previous estimate of 2.7 percent and is a sharp improvement over its initial estimate of 2 percent, the Telegraph reports.
According to the report, the revision reflected stronger consumer spending, which accounts for about 70 percent of America's economy.
The government said spending grew at an annual rate of 1.6 percent in the third quarter, above its previous estimate of 1.4 percent, the report added.
The Commerce Department also revised up its estimate of spending by state and local governments to show a gain of 0.3 percent, the first quarterly increase in three years.
Total government spending grew at 3.9 percent annual rate last quarter, reflecting a surge in defense spending.
Many analysts, however, predict an annual growth rate of just 1.5 percent.
According to the report, growth at that level is considered too weak to significantly lower the unemployment rate, which was 7.7 percent in November.
"The GDP upward revision was mostly a function of exports. On the face of it this shows consumer spending had a touch more momentum headed into the holiday season, but we are still looking at a modest outcome in the third quarter," Tom Porcelli at RBC Capital markets said.
"Having said that, it is important to note that this is very backward looking data and we already have a sense that activity in the fourth quarter started robust, but slowed dramatically. We already know momentum had faded," he added.