The US economy grew at its fastest rate in nearly 20 years in the third quarter amid robust consumer spending that carried on into the closing months of the year, government reports showed today.
The Commerce Department said GDP, which measures total output within US borders, advanced at an 8.2 per cent annual rate - the same as the department estimated a month ago and more than double the 3.1 per cent pace posted in the second quarter.
The robust third-quarter economic performance was in line with Wall Street analysts' expectations and prompted little reaction in financial markets.
Although growth is forecast to slow to around half the third-quarter rate during the final quarter of 2003, that is still a healthy pace of expansion and one which is predicted to be sustained or to accelerate moderately in 2004. Corporate profits after taxes advanced at a solid 10.1 per cent annual rate, down slightly from a 13.8 per cent rate of increase in the second quarter.
A separate Commerce report underlined the economy's momentum in the waning months of the year, showing consumer spending grew 0.4 per cent in November to a seasonally adjusted annual rate of $7.896 trillion after gaining 0.1 per cent in October.
Incomes rose a solid 0.5 per cent to an annual rate of $9.335 trillion after a smaller 0.3 per cent rise in October.
Inventories fell at a $9.1 billion annual rate in the third quarter, double the $4.5 billion rate of decrease in the second quarter.
Coupled with strong consumer spending, this may imply that companies are being forced to meet demand from current production, increasing the likelihood they will have to increase output.
"At the margin that points to an even greater need to rebuild inventories, which will tend to support output going forward," said economist Jade Zelnik of RBS Greenwich Capital markets in Greenwich, Connecticut.