The United States economy had actually grew higher in the third quarter than what had initially been calculated. Due to greater business and consumer spending, the gross domestic product inched higher to 3.9 percent during the July-to-September period, an increase from 3.5 percent reported a month ago, according to data from the Department of Commerce’s Bureau of Economic Analysis (BEA) released Tuesday.
A consensus of economists had forecast a downward revision to about 3.3 percent growth.
Much of the heightened growth can be attributed to declining gasoline prices, which has left consumers with an increase of discretionary cash, something that has given consumer spending a shot in the arm by 2.2 percent, up from 1.8 percent.
Consumer spending accounts for more than two-thirds of the U.S. economy.
Business investment rose sharply by 7.1 percent as enterprises boosted equipment spending – companies replaced aging computers, while factories acquired brand new machinery. Meanwhile, business stockpiling declined slightly, which also contributed to a greater GDP.
Exports also jumped 4.9 percent, a drop from the first estimate of 7.8 percent. Government spending was another area that was reduced since state and local governments’ outlays slashed.
Following the release of the upward revision, economists and financial experts are jubilant and have celebrated the economic recovery. Investors purport that the U.S. remains the only bright spot in the global economy as the eurozone is introducing stimulus measures to incite growth, Japan has slipped into a recession and China’s economy prowess has somewhat diminished.
With the U.S. experiencing a better overall economy, Wall Street generally believes the Federal Reserve will raise the key benchmark interest rate from near zero sometime in the middle of next year, though this has been a notion put forward since after the Great Recession.
It is projected that the U.S. economy will decline in the final quarter of the year, but then ramp up next year as wage growth and lower gas prices will amplify consumer spending.
