But businesses that had been building inventories in anticipation of more acceleration tapped the brakes.
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Prices of goods and services purchased by US residents-gross domestic purchases prices- increased 1.3 percent in the third quarter after increasing 1.5 percent in the second quarter. And worries about a slowing Chinese economy, which rattled stock markets all around the world, have receded.
Residential investment also remained healthy last quarter, a sign that the housing market continued to provide the overall economy with a much-needed tailwind.
The Fed assess the current pace of economic expansion as “moderate”, yet they see strong fundamentals in robust domestic consumer spending.
The economy grew at a 1.5% annual rate in the third quarter, the Commerce Department reported this morning, close to consensus forecasts of 1.8%. A second, more detailed estimate will be released on November 24, 2015. The economy has grown at about 2 percent so far this year.
A separate report from the Labor Department Thursday showed the number of applications for unemployment benefits were little changed last week, hovering near the lowest levels in four decades. Private domestic demand (excludes inventories, trade and government spending) climbed at a 3.2% pace.
Personal consumption expenditures added 2.19 percent to GDP after contributing 2.42 percent in the second quarter.
The data showed that consumer spending rose 3.2 percent between July and September – slightly less than the second quarter’s increase.
Stable employment in 2015 and cheaper prices at the pump have helped pad Americans’ pocketbooks. In addition, hospital spending increased by 6.1 percent from 2014 to $1.04 trillion, while physician and outpatient clinic spending increased by 5 percent to $650.1 billion. According to Goldman Sachs, the impact will hit hardest in the final months of the year through early 2016, then gradually diminish over the next two years.
The median sales price of new homes sold in September was $296,000 and the average sales price was $364,100.
Along those lines, goods exports rose by just 0.7 percent at the annual rate in the third quarter, but global trade was slower overall.
Despite the slowdown, however, America’s economy remains on an upward trajectory since a sluggish start to the year.
More confident than at any time since the end of the recession in 2009, consumers have spent heavily on new cars and trucks. “The third quarter was a bad quarter”.
The White House pointed out that economic growth in the quarter partly reflected “volatile transitory factors”. And if durable goods orders continue to fall, that may reflect more hesitation than these numbers suggest.
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The GDP data came a day after the Federal Reserve signaled it could raise its key interest rate for the first time since 2006 in December if it decides the economy is strong enough to weather the tightening.
