WASHINGTON—The U.S. economy grew 2.9% in the third quarter, according to the Commerce Department’s initial estimate released Friday.
That pace marks the fastest growth rate since the third quarter of 2014, noted NAFCU Chief Economist and Director of Research Curt Long.
This accelerated growth rate follows a moderate 1.4% rate in the second quarter.
Long pointed out that the improvement in gross domestic product was largely due to surging exports and businesses restocking their inventories.
“Non-residential investment also improved as businesses spent more on structures and intellectual property,” he added.
“Consumer spending continues to boost the economy as the labor market tightens and wage growth picks up,” Long said in a NAFCU Macro Data Flash report. After rising 4.3% during the second quarter, consumer spending increased by a more moderate 2.1% during the third quarter.
Data from the Bureau of Economic Analysis also show nonresidential investment increased 1.2% and government spending increased 0.5%; residential investment decreased 6.2%.
Long said contributions to growth of real GDP came from gains in personal consumption expenditures (1.47 percentage points), net exports (0.83%), changes in private inventories (0.61%), nonresidential investment (0.15%) and government spending (0.09%).
PCE inflation, the Fed’s preferred inflation metric, was 1.4% in the third quarter, down from 2% in the second quarter. Core PCE inflation (excluding food and energy) decreased from 1.8% in the second quarter to 1.7% in the third quarter.
“Given the strength of the labor market, the economy should continue along its present path of slow-but-steady growth,” Long added. “The Fed will be reassured, and NAFCU continues to expect a quarter-point rate hike in December.”