US economy grows 2.1 percent in third quarter, upward revision to initial estimate

The US dollar is weaker despite data showing the US economy grew by a revised 2.1 per cent in the September quarter, up from an initial estimate of 1.5 per cent. The data would likely strengthen the case for the Federal Reserve to proceed with an interest rate increase at next month’s meeting.

Data released on Tuesday showed the US economy expanded in the third quarter, performing better than previously estimated, according to a second official estimate of GDP.

Q3 GDP grew at a 2.1 per cent annualised pace, up from a first estimate of 1.5 per cent. However this was below the 3.9 per cent reported in the second quarter.

A breakdown of the report showed some bad points. US household consumption, which accounts for almost 70 percent of the economy, grew at a 3 percent annualized rate, less than the previously estimated 3.2 percent. But the good news for consumers is that incomes are picking up. Wages and salaries rose by $102.7 billion in the third quarter following a $109.4 billion gain in the April through June period that was almost $62 billion larger than previously estimated.

The report also showed that the upward revision in GDP was due to a smaller decline in inventories – the difference between goods sold and goods produced. Inventory accumulation only knocked 0.6 percentage points off growth in the second estimate rather the 1.4 percentage points in the first. A strong inventory accumulation by businesses could temper expectations of an acceleration in growth in the fourth quarter.

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Source:: US economy grows 2.1 percent in third quarter, upward revision to initial estimate

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