The US economy grew at a healthier clip in the third quarter than initially thought, suggesting resilience that could help give the Federal Reserve confidence to raise interest rates next month.
The Commerce Department on Tuesday said the nation's gross domestic product grew at a 2.1% annual pace, not the 1.5% rate it reported last month. It said efforts by businesses to reduce an inventory bloat had not been as aggressive as previously believed, CNBC reported.
The growth estimate was also boosted by upward revisions to business spending on equipment and investment in home building. While consumer spending was revised down a bit, its pace remained brisk.
When measured from the income side, the economy grew at a brisk 3.1% clip, an acceleration from the second quarter's 2.2% pace. The third-quarter's respectable expansion should set up the economy to achieve at least 2% growth in the second half of the year, around its long-run potential.
In the wake of robust job growth in October and strong domestic demand, the Fed is expected to raise rates at its Dec. 15-16 policy meeting.
The GDP revision was in line with economists' expectations. Businesses accumulated $90.2 billion worth of inventory in the third quarter, instead of the $56.8 billion reported last month.
As a result, the change in inventories chopped off 0.59 percentage point from third-quarter GDP growth, rather than the 1.44 percentage points the government reported in October.
