MOSCOW, November 26 (Sputnik) — The US economy expanded at a faster pace in the third quarter than previously estimated, performing better during the past six months than a decade, driven mostly by robust consumer spending.
The data, published yesterday by the US Department of Commerce, features a revised estimate of US real gross domestic product (GDP) in the third quarter of 2014. The total value of the aggregate volume of goods and services in America increased year-on-year by 3.9% as compared to the previous estimate of 3.5%. In the previous quarter, the US economy expanded by the annualized 4.6%, making this past half-year the best in terms of economic performance since the second half of 2003.
The upward revaluation of the US growth in Q3 came about as business and consumer spending, along with inventories, turned out to have been significantly higher during the period than previously thought. The numbers released last month were an “advance” estimate, and it was not until yesterday that the Department of Commerce could lay their hands on a full dataset, officials say. GDP expansion in the third quarter was driven, along with the private and corporate spending, by increased nonresidential fixed investment (+7.1%), federal government spending (+9.9%), growing exports (+4.9%) and falling imports (-0.7%), residential fixed investment (+2.7%) as well as spending of state and county-level administrations (+0.8%). The Department of Commerce also stressed that the data indicates the sustainability of the US's recovery against external risks, like the recession in Japan and cheaper yen, the stagnating Eurozone and the accelerated cooling of mainland China.
Despite the initial government estimate of 3.5%, many observers were expecting it to be reduced to 3.3% as consumer confidence was at its five-month lows and with the real estate sector nearing stagnation. The decline in consumer confidence is surprising, as fuel prices and unemployment are falling.
Nonetheless, the US economy is one of the best performing on a global scale, as compared with contracting Japan, sluggish Europe, faltering China and the struggling oil-dependent nations. Recent US GDP figures have indicated that the Fed’s monetary tightening may indicate a soon interest rate hike. As a result, US stocks were flat on the news. The dollar slightly depreciated against other currencies, and the US bonds’ prices added insignificantly.
“The data today really bode well for 2015,” Rupkey told Bloomberg.“Businesses have a pretty good reading on consumer demand for their goods and services. They would not be ordering additional equipment if they did not think the consumer was going to be there down the road for them.”