THE US economy grew well ahead of expectations in the third quarter of the year, expanding by 2.8 per cent on an annualised basis, according to the first official estimate.
Though the figures revealed a slowdown in personal consumption yesterday, a rise in inventories allowed for a quicker pace of growth. The rate was faster than in the second quarter, when the economy grew by 2.5 per cent on the same basis.
According to the Bureau of Economic Analysis, firms raised their inventories by $86bn (£53.66bn) during the quarter, more than twice the size of the first quarter’s increase.
The US central government’s spending continued to fall in real terms, with federal government consumption spending and gross investment down 1.7 per cent on an annualised basis, after falling 1.6 per cent in the second quarter.
However, at the state and local level, spending ticked upwards, rising by 1.5 per cent in comparison to a 0.4 per cent increase in the second quarter.
Analysts were cautious as to whether the robust figure would affect the Federal Reserve’s decision on whether to taper their quantitative easing programme next month.
Paul Ashworth of Capital Economics commented: “Frankly, it’s hard to know exactly what precise improvement Fed officials are looking for after all the flip-flopping.”
However, the US government’s shutdown did not begin until the start of the fourth quarter, running through the early part of October, and leading Ashworth to predict slightly weaker growth in the fourth quarter, between two and 2.5 per cent.
The number of new jobless claims for the week ending on 2 November was also released by US statisticians yesterday: 336,000 American workers began to receive unemployment benefits over the period, a decline of 9,000 on the previous week.