The U.S. economy grew in the third quarter at its fastest rate in three years, maintaining its momentum despite the damage from two major hurricanes.
In its second of three estimates, the Commerce Department said Wednesday that gross domestic product increased at a 3.3% annual rate in the July-September period, an upward revision from the previously reported 3.0% and the strongest growth since a 5.2% surge in the third quarter of 2014.
Economists had expected that third-quarter GDP growth would be raised to a 3.2% rate. It is the first time since 2014 that the economy has experienced growth of 3% or more for two straight quarters.
“The news on the economy had previously been good, but it just got a little better,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, told the Associated Press, adding that the holiday shopping season appears to be off to a strong start, “which bodes well for consumer spending to propel the economy to a strong finish to the year.”
Before the latest third-quarter estimate, the Federal Reserve Bank of Atlanta had forecast growth would rise to a 3.4% annual pace in the final three months of 2017, which could bring growth for the full year close to 2.8%. GDP grew 1.5% in 2016.
According to the AP, “The U.S. economy is benefiting from a pickup in global growth, a healthy job market, which supports consumer spending, and a drop in the value of the dollar against other major currencies, which makes U.S. products less expensive in foreign markets.”
President Trump has set a 3% target for long-term economic growth but economists see only a modest short-term boost to growth from efforts by Republicans in Congress to push through a broad package of tax cuts, including slashing the corporate income tax rate to 20% from 35%.
“Corporate and personal income tax cuts will have minimal impact on growth over the longer run,” Gus Faucher, chief economist at PNC Financial, told Reuters. “In 2019 and beyond growth will settle in to its long-run average of 2 percent to 2.25 percent.”