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The US economy grew even more in the third quarter than we thought

By Matt Phillips
Published Last updated This article is more than 2 years old.

Another positive—if somewhat tertiary—data point on the improving US economy. The third and final revision of third-quarter GDP shows that it grew at an annualized clip of 4.1% (pdf) over the second quarter, even faster than the 3.6% of the previous estimate, which was faster still than the 2.8% initial estimate. Areas of the economy that grew faster than first thought included private inventories, personal consumer spending, business investment, exports, residential real estate and state and local government spending. Negatives included even weaker federal spending than first thought.

While the growth in inventories at US companies has been a concern to some—because it suggests that the economic surge isn’t the result of an increase in demand but merely of companies stocking up, and will therefore be short-lived—the stronger-than-expected recent data on everything from housing starts to retail sales suggests businesses are in fact ramping up to meet an increase in consumption from end buyers. Viewed in that light, increasing inventories are a positive indicator that the US economy is actually gaining a bit of momentum.

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