US economy grew at 3.2 percent in third quarter

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US economy grew at 3.2 percent in third quarter

The economy grew at the fastest pace in more than two years in the third quarter, as consumers and government stepped up their spending and exports surged, MarketWatch reported.

In a separate report, USA home prices rose 5.5 per cent in the year to September, meaning house prices overall have now fully recovered from their plunge during the 2008 financial crisis.

"Couple that with an increasingly enthusiastic consumer supported by stronger wage gains and the economy appears well-positioned to remain on a growth path heading into 2017", said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. Economists had predicted a revision to 3 per cent.

According to USA media reports, the data marks the strongest growth for the U.S. since the 2014 third quarter.

Based on a more comprehensive set of data, the revised GDP showed U.S. consumers spent more on construction for single-family housing, while investment in non-residential structures was revised upwards to 10.1 percent from 5.4 percent.

Bloomberg had a consensus estimate of 3.1% on the first revision, with an Econoday range of $2.9% to 3.2%.

Residential investment was less of a drag, falling at a 4.4 percent pace, after an initial reading of a 6.2 percent drop, reflecting upward revisions to single-family housing and to data on dealers of building materials and garden supplies.

Gross private domestic investment increased at a 2.1% annual rate in the third quarter, which was lower than the first estimate of 3.1%.

The Commerce Department will release a final estimate of third quarter growth next month.

Strong consumer spending and stable labor market helped bolster the economic growth in the quarter ended September.

These figures are likely to reinforce the expectation that the Federal Reserve would raise interest rate in December.

During the recent campaign, President-elect Donald Trump decried what he saw as a sluggish economic recovery under Obama, with GDP gains averaging around 2 percent since the end of the recession.

Another report on Tuesday signalled momentum in household spending this quarter.

Corporate profits continued to rebound last quarter amid solid growth in the broader USA economy. These include greater consumer spending and business investment in equipment and structures, more export sales and slightly stronger government spending. That was the fastest pace of increase in gross domestic income in almost two years and followed a 0.7 percent rate of expansion in the second quarter. Businesses accumulated inventories at a $7.6 billion rate in the last quarter, nearly half of the $12.6 billion pace reported last month.

Given the quirks involved in GDP calculations, some economists prefer to track gross domestic income.

Consumers also had more spending power in the three-month period than previously thought.

This means businesses will have more scope to place new orders, which augurs well for economic growth in the coming quarters.

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