US Commerce Department reports a GDP upswing in the third quarter
It’s shaping up to be a stronger year than expected for the United States economy. Today the U.S. Commerce Department announced that the U.S. gross domestic product (GDP) grew at an annual rate of 2.1 percent in the third quarter of 2015, exceeding analyst expectations of 1.5 percent growth.
This growth has been spurred on by spending on the part of both consumers and businesses—Reuters reports that economic growth has been further boosted by companies investing in improvements like new equipment. While consumer spending has been slightly below expectations, it is still robust and suggests that consumers are not holding back on discretionary spending this year:
"Despite the drop, more consumers say they plan to buy homes, automobiles and other big-ticket items over the next six months. 'The bigger picture suggests that domestic demand is still firm, spending plans are evolving positively and the housing market continues to post gains,' said Robert Kavcic, a senior economist at BMO Capital Markets in Toronto."
With that said, experts are still concerned about how the GDP will shake out at the year’s end. Corporate profits fell 1.6 percent after tax (a contrast with the rise in second quarter), a drop in oil prices has caused problems in the energy sector, and there is also the issue of inventory accumulation—Reuters notes that U.S. businesses managed to amass $90.2 billion in inventory within the third quarter, much more than expected. For the fourth quarter to remain strong, these businesses will need to encourage continued consumer spend and ensure that supply and demand do not become unbalanced.
But overall it is a promising upswing, and economists predict further consumer spending and a good situation for both consumers and businesses.