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US economy grows faster than first forecast | US economy grows faster than first forecast |
(35 minutes later) | |
The US economy grew much faster than first reported during the third quarter, official figures have shown. | The US economy grew much faster than first reported during the third quarter, official figures have shown. |
It expanded at an annualised rate of 3.9% between July and September, up from the 3.5% first estimated by the Bureau of Economic Analysis. | It expanded at an annualised rate of 3.9% between July and September, up from the 3.5% first estimated by the Bureau of Economic Analysis. |
The rise, which follows a strong second quarter, means the US has seen its strongest two consecutive quarters of growth for a decade. | The rise, which follows a strong second quarter, means the US has seen its strongest two consecutive quarters of growth for a decade. |
Consumer spending was the biggest driver of the raised estimate. | Consumer spending was the biggest driver of the raised estimate. |
It grew by 2.2% according to the latest estimate, which was higher than the initial calculation of 1.8%. | It grew by 2.2% according to the latest estimate, which was higher than the initial calculation of 1.8%. |
Consumer spending is closely watched as it accounts for 70% of US gross domestic product (GDP). | Consumer spending is closely watched as it accounts for 70% of US gross domestic product (GDP). |
Moving on | |
The data suggests the US has shrugged off the slow start to the year when heavy snow saw the economy shrink. | The data suggests the US has shrugged off the slow start to the year when heavy snow saw the economy shrink. |
Analysts are expecting growth of around 2.2% overall for the full year, matching the rate of expansion in 2013. | Analysts are expecting growth of around 2.2% overall for the full year, matching the rate of expansion in 2013. |
"The question of whether the economy is accelerating or will accelerate is no longer a question; we can say somewhat definitively that the economy has already accelerated," said Dan Greenhaus, chief strategist at BTIG. | "The question of whether the economy is accelerating or will accelerate is no longer a question; we can say somewhat definitively that the economy has already accelerated," said Dan Greenhaus, chief strategist at BTIG. |
Meanwhile, a separate survey, showed US house prices rose by more than expected in September. | Meanwhile, a separate survey, showed US house prices rose by more than expected in September. |
The closely-watched S&P/Case Shiller index jumped 4.9% year-on-year. | The closely-watched S&P/Case Shiller index jumped 4.9% year-on-year. |
The index, which measures single-family home prices in 20 cities, showed that prices were up 0.3% month-on-month on a seasonally adjusted basis. | The index, which measures single-family home prices in 20 cities, showed that prices were up 0.3% month-on-month on a seasonally adjusted basis. |
"With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. | "With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. |
March rate rise? | |
Capital Economics economist Paul Dales said the strong GDP upgrade underlined his expectation that the Federal Reserve could raise interest rates as soon as March next year. | |
"Most people were expecting a downward revision so this was a real surprise," he added. | |
At the end of October, the US Federal Reserve said it would not raise interest rates for a "considerable time". | |
It also ended its quantitative easing (QE) stimulus programme of buying financial assets and creating new money to pay for them, aimed at stimulating the economy. | |
However, it said it was confident the US economic recovery would continue, despite a global economic slowdown. |