WASHINGTON: US economic growth accelerated to a 2.9 per cent annual rate in the third quarter, boosted by a big jump in exports and solid consumer spending, the Commerce Department reported Friday.
Coming just 11 days before the presidential election in which the economy has been a major issue, the GDP data showed the strongest growth in two years, and was better than the consensus forecast of 2.5 per cent.
Export growth of 10 per cent in the July-September period drove the expansion, and also was the strongest pace in two years.
Many analysts revised their forecasts upwards this week, to as high as 3.0 per cent, especially following the release of advance trade data Wednesday.
In this initial estimate of gross domestic product, the Commerce Department also credited personal consumption for the positive result. Spending rose 2.1 per cent in the period, though just half the rate of the prior quarter.
Federal spending rose 2.5 per cent after declining in the previous two quarters.
However, some economists say the report exaggerates growth and likely will be revised lower next month.
“These data likely overstate growth significantly,” Ian Shepherdson, chief economist at Pantheon Macroeconomics said.
He pointed to a surge in soybean exports, saying “the headline GDP number looks good but the soybean export surge will reverse in Q4, and that’s a significant headwind.”
Jim O’Sullivan, chief US economist at High Frequency Economics, agreed. “The farm-led surge in exports in particular looks extreme. Even so, the data only reinforce the impression that the trend in growth remains strong enough to keep the labour market improving — the key precondition for more Fed tightening.”
Most analysts expect the Federal Reserve to raise interest rates at its December meeting.
