Led by a rise in business investment, the U.S. economy grew at an annual pace of 3.3% from July through September, its fastest rate in three years.

The Commerce Department estimated Wednesday that third-quarter growth exceeded the 3% annual expansion it had initially reported last month.

The performance, achieved despite damage from two devastating hurricanes, marked the fastest expansion in gross domestic product—the broadest gauge of economic output—since a 5.2% annual spurt in the third quarter of 2014.

The estimated growth for the July-September quarter marked an improvement on 3.1% annual growth in the second quarter and a 1.2% annual pace in the January-March quarter.

Before the revised third-quarter numbers came out, the Federal Reserve Bank of Atlanta was forecasting that growth would rise to a 3.4% annual pace in the final three months of 2017, which could bring growth for the year close to 2.8%. In 2016 the economy grew just 1.5%.

The economy showed resilience last quarter in the face of two hurricanes: Harvey, which hit Texas in late August, and Irma, which battered Florida in September.

The U.S. economy is benefiting from a pickup in global growth, a healthy job market that supports consumer spending and a drop in the value of the dollar against other major currencies, which makes U.S. products less expensive in foreign markets.

Read: Global growth up, but won’t last long: OECD

What you need to know:

  • Business investment increased at a strong 7.3% annual pace from July through September, the sharpest pickup since the end of 2016.
  • Consumer spending, which accounts for about 70% of U.S. economic output, grew at an annual pace of 2.3%, down from 3.3% in the second quarter.
  • Government spending and investment rose for the first time in three quarters, led by an uptick in defence spending.
  • The Commerce Department’s third and final estimate of third-quarter GDP will come out on Dec. 21.
  • The Federal Reserve’s preferred gauge of inflation, which is included in the GDP report, rose at an annual pace of just 1.5%, well below the Fed’s 2% target.
  • The Fed is still widely expected to raise interest rates in December for the third time this year.

Also read: 

Why Canada’s GDP will drag in Q3

Prepare for price increases: economists

Originally published on Advisor.ca
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