WASHINGTON—The world’s largest economy grew even faster than initially thought in the third quarter, based in large part on a jump in spending, the US Commerce Department said Tuesday.
According to a revised GDP report, the economy grew at an annual rate of 3.2 percent, three-tenths higher than the initial estimate published last month, which was already the fastest rate in two years.
A consensus analyst forecast had called for a more modest upward revision to 3.0 percent, from the 2.9 percent initial estimate.
The results showed an even more emphatic upswing at the start of the second half of 2016. Anemic growth in the first half helped convince US monetary policymakers to forego a planned course of interest rate hikes during the year.
However, the US Federal Reserve is widely expected to increase rates from their historically low levels when it meets next month.
Based on a more comprehensive set of data, the revised GDP showed US consumers spent more on construction for single-family housing, while investment in non-residential structures was revised upwards to 10.1 percent from 5.4 percent.
In a statement, the White House noted that economic conditions abroad had not held back foreign sales, but acknowledged some temporary factors pushing exports.
“Exports, which have faced substantial headwinds in recent years from slow growth abroad, grew at an annual rate of 10.1 percent in the third quarter, boosted in part by transitory factors,” said Jason Furman, chairman of the Council of Economic Advisors.
The data showed spending on durable goods rose 2.8 percent over the second quarter, 0.7 points more than previously estimated.
Sharp gains in consumer spending on auto parts and retail sales in “other” non-durable goods, also boosted growth, including newly available data from the Bureau of Alcohol Tobacco and Firearms.
The personal consumption expenditures price index was unchanged at 1.4 percent.
Jim O’Sullivan of High Frequency Economics cautioned against putting too much confidence in the upward revisions, saying the strength of the economy appeared “exaggerated.”
“We don’t think the underlying trend has suddenly moved up sharply,” he wrote in a research note. “Still, there is certainly no sign of weakening.”
The adjustment reflected data from the Alcohol and Tobacco Tax and Trade Bureau, as well as figures on monthly retail sales, motor vehicle registrations and electricity usage, according to the Commerce Department.
Consumers also had more spending power in the three-month period than previously thought. Wages and salaries were up $110.2 billion from the second quarter, after an initial estimate of a $94.6 billion gain.
Another report on Tuesday signaled momentum in household spending this quarter. The Conference Board’s consumer confidence index rose to 107.1 in November, the highest level in more than nine years, from 100.8 in October.
Residential investment was less of a drag, falling at a 4.4 percent pace, after an initial reading of a 6.2 percent drop, reflecting upward revisions to single-family housing and to data on dealers of building materials and garden supplies.
