The United States economy grew at a faster rate than what was initially thought during the third quarter, reaching its quickest pace in the past three years helped by strong business investment in equipment and the accumulation of inventories.
The U.S. gross domestic product grew at an annual rate of 3.3% during the three months ending September 30, also helped by the rebound in government investments, said the Commerce Department in its second estimate of the GDP on Wednesday.
The pace was the fastest since the 2014 third quarter and an increase from this year’s second quarter, which was 3.1%.
The economy previously was reported to have expanded at a pace of 3% for the three months. It was just the first time dating back to 2014 that the U.S. economy had experienced growth of 3% or higher for two consecutive quarters.
However, the growth rates exaggerates the economy’s health, as goods not yet sold, inventories, represented close to a third of the growth in the GDP.
Taking inventory investment out of the equation and the economy grew only at an annualized rate of 2.5%. When measured using income, output grew at the same 2.5% rate.
Economists were expecting the GDP growth rate for the third quarter would be increased to 3.2%. The brisk pace of growth strengthens the Federal Reserve’s case for raising its interest rates in December. The central bank of the U.S. has increased costs of borrowing twice in 2017.
Federal Reserve Chairwoman Janet Yellen on Wednesday said that the economic expansion has become increasingly broad based in sectors and she expected the economy would continue growing.
Prices of Treasuries were down on the new data and remarks made by Yellen. The U.S. dollar did not change against a host of other currencies, while stocks ended mixed on Wednesday.
The recovery economically since the recession of 2007-2009 has entered its eighth year and shows little sign of slowing down. The economy has been and continues to be powered by the tightening U.S. labor market, which largely has maintained strong performances that began during the first term of former President Barack Obama.
U.S. economists see a modest boosts in the growth from the efforts by current President Donald Trump and fellow Republicans on Capitol Hill to push a broad package through Congress of tax cuts that include slashing corporate tax rates from 35% to 20%.