- Millan Mulraine, deputy chief economist at TD Securities
US economic expansion was much stronger than initially estimated in the three months through September, adding to signs that the world's number one economy remains on a solid footing despite increasing global uncertainty. The nations' gross domestic product rose a seasonally adjusted 3.9% in the third quarter compared with the 3.5% rate expected earlier, according to the Commerce Department. Growth in the past two quarters represents the best six-month streak of gains since late 2003. Output grew at a 4.6% rate in the second quarter, after a first-quarter contraction. Consumer spending, which makes up more than two-thirds of US economic output, rose at a 2.2% pace compared with the previously reported 1.8% rate. Government spending contributed to GDP growth for the second quarter in a row, after mostly serving as drag in recent years. Military outlays were the primary catalyst, rising at a 16% pace in the reported period.
Data ranging from manufacturing to employment and retail sales indicate the economy retained some of that steam early in the final quarter. Growth estimates for the fourth quarter are running a bit below a 3.0% rate. The solid economic growth pace also could boost expectations the Fed will start lifting its short-term interest rate sometime in mid-2015. The US central bank has kept its benchmark lending rate near zero since December 2008.
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