U.S. GDP Growth Unexpectedly Accelerates In Q3

(RTTNews) - Economic activity in the U.S. grew by more than anticipated in the third quarter, according to a report released by the Commerce Department on Thursday.

The report said U.S. gross domestic product rose by 2.8 percent in the third quarter compared to economist estimates for an increase of 2.0 percent.

While the growth reflects an acceleration from the 2.5 percent increase in the second quarter, economists noted that inventory accumulation added 0.8 percentage points to the third quarter growth rate.

The Commerce Department said the faster growth reflected accelerations in private inventory investment and state and local government spending and a deceleration in imports, which are a subtraction in the calculation of GDP.

Decelerations in exports, non-residential fixed investment, and consumer spending helped to limit the pace of growth in the third quarter.

The report said consumer spending rose by 1.5 percent in the third quarter, reflecting a slowdown compared to the 1.8 percent growth seen in the second quarter.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Overall, the pick-up in GDP growth will presumably add to the speculation that the Fed might yet begin tapering its asset purchases in December, even though the ECB is loosening monetary policy in the euro-zone."

"Frankly, it's hard to know exactly what precise improvement Fed officials are looking for after all the flip-flopping," he added. "October's payrolls figures, due out tomorrow, will provide a little more insight."

The Commerce Department said its reading on core consumer prices, which exclude food and energy prices, rose by 1.4 percent in the third quarter following a 0.6 percent increase in the second quarter.