U.S. economic growth was significantly stronger than initially estimated in the third quarter, giving the country its strongest six months of growth in more than a decade and pointing to improving fundamentals that should support the economy for the rest of the year. The Commerce Department on Tuesday raised its estimate of gross domestic product (GDP) to a 3.9 percent annual rate from the 3.5 percent rate reported last month, reflecting upward revisions to business and consumer spending. The stronger third-quarter growth followed a 4.6 percent surge in the spring, which resulted in the biggest consecutive quarters of growth since 2003. In the third quarter, consumer spending, which accounts for 70 percent of U.S. economic activity, grew at a 2.2 percent rate, up from an initial estimate of 1.8 percent. Business investment in equipment jumped at a 10.7 percent rate, higher than the initial 7.2 percent estimate. The higher consumer and business spending offset a mild drag from inventories and a sharp slowdown in export growth to a 4.9 percent rate from the previously reported 7.8 percent rate. The July-September period was the fourth quarter out of the past five that the economy has expanded above a 3.5 percent pace. Data including manufacturing, employment, and retail sales suggest the economy retained some of that momentum early the fourth quarter. Analysts believe GDP growth could slow to around 2.5 percent in the current quarter but then accelerate again in 2015. They expect growth of around 3 percent next year, representing a sustained acceleration in activity six years after the 2007-2009 Great Recession.
