The US economy posted its strongest growth in 11 years during the third quarter, supported by robust consumer spending and business investment.
Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 5% in the third quarter, Business Recorder quoted the Commerce Department as saying.
That was up from the second quarter’s growth rate of 4.6% and the strongest pace since the third quarter of 2003, when GDP grew at a 6.9% pace.
The agency last month had estimated third-quarter GDP growth at 3.9%. Economists had expected a smaller upward revision, to 4.3% growth.
Spending Up
Last week’s report showed stronger-than-expected spending by US consumers, particularly on services like health care. Fixed nonresidential investment also was revised up, signaling more spending by businesses on new buildings and research and development.
“There is a positive feedback loop going on at the moment,” Mike Jakeman, global analyst for the Economist Intelligence Unit, said in a note. “Job creation is running at the strongest rate for 15 years. More people in work means more income, which means more private spending, which means more business investment, which means more hiring.”
The jump in growth was less dramatic on an annual basis. Economic output in the third quarter climbed 2.7% from a year earlier, up from 2.6% growth in the second quarter.
US stocks rose sharply after the report was released Tuesday morning, with the Dow industrials topping 18,000 for the first time.
Savings & Investment
Where most people see falling oil prices as a source of savings, others see investment opportunities. Many advisers and mutual-fund managers are buying shares of midstream energy firms, large exploration-and-production companies and energy-focused master limited partnerships.
Stocks of midstream companies – those involved in the transport and storage of oil and gas products – “have been overdone on the downside,” says Keith Goddard, chief executive of Capital Advisors in Tulsa, Okla. Prices “are attractive enough to give us a good return over three years, “ says Goddard, whose independent investment firm oversees $1.5 billion.
Treven Ayers, chief investment officer at Clearview Wealth Management in Charlotte, N.C., has also been taking advantage of the downturn, rebalancing client portfolios into the selloff. His firm, which manages $65 million, is finding opportunities in domestic and international stocks as well as energy-focused MLPs and global bonds.
Last month, the firm added to its holdings in Exxon Mobil and Chevron, the nation’s first- and second-largest energy companies, which explore for, produce and refine oil and natural gas.
