WASHINGTON – The U.S. economy expanded in the third quarter at a faster rate than previously estimated as consumers stepped up spending on services such as health care and companies invested more in software.
Gross domestic product climbed at a 4.1 percent annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, Commerce Department figures showed Friday in Washington. The median forecast of 72 economists surveyed by Bloomberg projected a 3.6 percent pace after 2.5 percent in the second quarter.
Inventories accounted for a third of the gain in GDP in the third quarter, showing companies were confident about the prospects for demand. Stronger retail sales in October and November underscore the Federal Reserve’s view that the world’s largest economy is improving.
“The wealth effects resulting from rising equities and house prices are being reinforced by improving conditions in labor markets, which is leading to pretty healthy gains in wages and salaries,” said Ben Herzon, a St. Louis-based economist at Macroeconomic Advisers LLC. “All of that is coming together to create accelerating private domestic demand, which bodes well for GDP growth heading into next year.”
Forecasts for GDP, the value of all goods and services produced in the U.S., ranged from gains of 3.3 percent to 3.8 percent, according to the Bloomberg survey. The GDP estimate is the third and final for the quarter.
Stock-index futures held gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in March rising 0.2 percent to 1,805.8 at 8:40 a.m. in New York.
Consumer purchases, which accounts for almost 70 percent of the economy, increased 2 percent, more than the previously reported 1.4 percent, the revised data showed.
Spending on services contributed 0.32 percentage point to third-quarter growth, up from a previously reported 0.02 percentage point. In addition to the pickup in outlays for health care, Americans spent more on recreational services.
Inventories increased at a $115.7 billion annualized pace in the third quarter, the most in three years, after a previously reported $116.5 billion annualized rate. In the second quarter, they rose at a $56.6 billion pace.
Stockpiles added 1.67 percentage points to GDP last quarter, little changed from the 1.68 percentage-point contribution in the previous reading.
While economists grew more optimistic about demand in the fourth quarter, GDP will nonetheless be restrained as the pace of inventory growth cools.
JPMorgan Chase & Co. economists project the economy will grow 2 percent from October through December, up from the 1.5 percent rate they had penciled in prior to the Commerce Department’s Dec. 12 retail sales report. Barclays PLC has raised its fourth-quarter tracking estimate to 2.3 percent from 2 percent before the retail figures.