Consumer, Business Spending Support U.S. Third-Quarter Growth

The U.S. economy grew at a fairly healthy clip in the third quarter as strong consumer and business spending offset efforts by businesses to reduce an inventory glut, underscoring its resilience despite a raft of headwinds.

Gross domestic product grew at a 2.0 percent annual pace, instead of the 2.1 percent rate reported last month, the Commerce Department said in its third estimate on Tuesday.

While that was a sharp deceleration from the brisk 3.9 percent pace logged in the April-June period, growth remained around the economy’s long-run potential.

The Federal Reserve last week raised its benchmark overnight interest rate by 25 basis points to between 0.25 percent and 0.50 percent, the first increase in nearly a decade.

The rate hike was a vote of confidence in the economy, which has been buffeted by slower global demand, a strong dollar and spending cuts in the energy sector.

U.S. Treasuries extended losses after the data, sending yields to session highs. The dollar rose against a basket of currencies.

When measured from the income side, the economy grew at a 2.7 percent pace, not the 3.1 percent rate reported last month, to account for downward revisions to corporate profits.

Reuters

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