Economy Grew At Brisk Pace In Third Quarter

GDP growth for July-September revised upwards on strength of consumer spending, business investment

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The economy grew a healthy 4.1 percent from July through September of this year, the fastest rate of growth in two years, according to government data released Friday.

The Commerce Department announced it had revised its estimate of GDP growth in the third quarter of 2013 to an annualized rate of 4.1% from its previous estimate of 3.6%, beating economists’ estimates and giving the U.S. economy its most robust quarter since 2011. The revisions were a result of there being more consumer spending and business investment in the third quarter than previously thought — two measures that are important for creating sustainable growth going forward.

But much of the increase in GDP still came from businesses increasing their inventories — meaning they’ve bought products from suppliers that there may or may not be demand for in the marketplace, which could slow growth later.

2 comments
SavvyInvestor
SavvyInvestor

Good point about the inventories.  Investors are all too often misled by irrelevant indicators.  We have a complex economy and a lot of journalists merely consult "economic experts" and "business economists" who never studied macroeconomics at a professional level - people like the majority of the Federal Reserve governors.   Most of them never read "The General Theories of Inflation, Unemployment, and Government Deficits" or something similar.  That's why they cling to simple solutions, make bad decisions because they take insignificant indicators seriously,  and our economic malaise continues even though it could be rather quickly ended.