The U.S. economy expanded at a better pace in the third quarter of this year than was earlier estimated, leading to the best quarterly GDP growth in the last three years. In its second estimate, the Department of Commerce upwardly revised economic growth for the third quarter. The report highlighted moderate growth in consumer spending, a rise in business investment and an expansion in government spending.
Given this performance, it is likely that the U.S. economy will register a steady growth pace even in the final quarter of this year. With the domestic economy witnessing stable expansion, reaching full capacity, growth mutual funds have emerged as prudent investment options.
Q3 GDPAdvances in Second Estimate
In its second estimate, GDP increased from the previous estimate of 3% to 3.3%, the best since the third quarter of 2014. It also improved from the second quarter’s pace of 3.1%. Moreover, corporate profits after tax increased 5.8% year over year, after a 0.1% uptick in the second quarter of this year.
Additionally, both consumer spending and business investment gained traction in the third quarter. Consumer spending, which accounts for a bulk of U.S. economic output, decreased from 2.4% to 2.3% in the second estimate. Despite moderation in consumer spending, strong increase in business investment and a rebound in government expenditure gave a boost to the GDP.
Business investment registered strong increase, which outweighed the fall in consumer spending. Business investment witnessed an increase of 10.4%, its fastest growth pace in the last three years. Strong spending in equipment and software boosted business investment in the third quarter. According to the second estimate, business investment contributed 1.2% to total GDP growth, higher than previous estimate of around 1% contribution.
Additionally, government spending increased 0.4%, after reporting a decline of 0.1% in the advance estimate for the third quarter. Government expenditure managed to increase, after contracting in the first two quarters of this year.
