WASHINGTON (BLOOMBERG) - The U.S. economy expanded at a revised 2 per cent annualized rate in the third quarter, buoyed by consumer spending as businesses struggled to sell to overseas customers battered by sluggish growth.
The gain in gross domestic product followed a 3.9 advance in the second quarter, Commerce Department figures showed Tuesday in Washington. The median forecast of 76 economists surveyed by Bloomberg called for a 1.9 per cent increase compared with the previously reported 2.1 per cent pace.
Even with the slight reduction in growth, household purchases propelled demand last quarter as employment improved and fuel prices remained low. Nonetheless, consumers alone won't be able to shoulder the burden of helping the world's largest economy overcome slower global growth, so areas such as business investment and government outlays will also need to strengthen.
"There is some concern that consumption can't drive GDP forever - other parts of the economy will have to create some tailwinds to really help growth along," Gennadiy Goldberg, a U.S. rates strategist for TD Securities LLC in New York, said before the report.
Economists' projections for GDP, the value of all goods and services produced, ranged from 1.5 per cent to 2.1 per cent. The latest estimate is the third for the quarter and the reading won't be updated again until annual revisions are issued in July of 2016.
The economy grew at an average pace of 2.3 per cent in the first half of the year after expanding 2.4 per cent in all of 2014.
The slight reduction in third-quarter growth reflected a smaller increase in inventories than previously estimated. Consumer spending was little changed from the prior report as a reduction in outlays on financial services was offset by a bigger gain among non-profit agencies serving households.
Weaker overseas growth and a strong dollar have weighed on net exports, with trade subtracting 0.3 percentage point from overall growth after adding 0.2 percentage point in the prior three-month period. Sustained growth in the U.S. combined with weakening in other parts of the globe, including in China, could widen the gap between exports and imports in the quarters ahead.
Corporate spending on equipment advanced at a 9.9 per cent annualized pace, adding 0.6 percentage point to growth and the biggest gain in a year.
Household purchases, which account for almost 70 per cent of the economy, rose at a 3 percent annual pace, the same as previously estimated. Personal consumption added 2 percentage points to growth.
Steady payroll gains and cheap gasoline are helping support Americans. Payrolls have advanced at a 210,000 average monthly pace this year through November, compared with a 260,000 average for all of 2014 that was the strongest in 15 years.