The U.S. economy’s growth rate last quarter was revised upward to the fastest in three years on stronger investment from businesses and government agencies than previously estimated, Commerce Department data showed Wednesday. The latest results for GDP, the value of all goods and services produced, show the economy withstood major hurricanes to reach a more solid footing as it entered the final stretch of the year, thanks to stronger business spending that’s helping cushion a softer pace of consumption. Federal Reserve Chair Janet Yellen said Wednesday, just before the GDP report, that the expansion is “increasingly broad based across sectors as well as across much of the global economy.” While the revised growth rate is in line with President Donald Trump’s goal, economists generally see such a pace as unsustainable and expect growth to slow sometime in 2018. Trump and congressional Republicans are pushing a tax-cut plan with the aim of lifting GDP gains to 3 percent annually, though analysts expect any economic boost to be modest, on balance, if the proposal becomes law. Consumer spending, which accounts for about 70 percent of the economy, continues to be the main driver of growth, though revisions showed it was slightly weaker than previously estimated on purchases of both durable and nondurable goods. The biggest improvement came in business investment, which made a 1.2 percentage-point contribution to growth, up from 0.98 point in the initial estimate a month ago. In addition to greater spending on transportation equipment, the data also reflected more software spending. Nonresidential structures were revised to a bigger decline. While the first look at third-quarter gross domestic income showed a pickup, the prior quarter was revised downward by 0.6 percentage point, reflecting a smaller gain in wages and salaries. The average of GDP and GDI was a 2.9 percent gain. Corporate profits grew, albeit at a slower year-over-year pace than in the prior period. Price data in the GDP report showed inflation remains behind the Fed’s 2 percent goal. Excluding food and energy, the central bank’s preferred price index tied to personal spending rose at a 1.4 percent annualized rate last quarter, revised from 1.3 percent and following a second-quarter gain of 0.9 percent.
Definitely some mixed numbers. But, overall, some really good news here! 🙂