The economy grew at its fast rates in 11 years in the third quarter, according to a third estimate released by the Bureau of Economic Analysis (BEA) that showed consumer spending increased more than thought.
The BEA now estimates real gross domestic product (GDP) grew 5.0 percent in the third quarter, up substantially from the 3.9 percent estimate releases last month when less data were available. The new estimate also showed an acceleration from the second quarter, when real GDP grew 4.6 percent. Real gross domestic product is the value of the production of goods and services in the United States, adjusted for price changes, or inflation.
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCEs), nonresidential fixed investment, federal government spending, exports, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.
Real PCE increased 3.2 percent in the third quarter, compared with an increase of 2.5 percent in the second. In a separate report Tuesday, BEA estimated real PCE grew 0.7 percent in November, up from 0.2 percent in October, with purchases of durable goods such as cars growing 2.3 percent and non-durable goods, such as apparel and footwear, growing 1.0 percent.
The acceleration in the percent change in real GDP reflected a downturn in imports, an upturn in federal government spending, and an acceleration in PCE that were partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment, and in nonresidential fixed investment.
Together with preliminary estimates of personal income for November, the news sent prices of many consumer stocks upward Tuesday as analysts grew more optimistic about the holiday sales outlook.