Worries of an impending economic slowdown have largely been quelled for the time being. In the latest revision to the GDP estimate, the Commerce Department reports that the U.S. economy saw its best growth performance in two years in Q3 2016.
In the new estimate, the U.S. Commerce Department released today, the GDP’s annual growth rate was revised from the previously reported figure of 2.9 percent up to 3.2 percent. The third quarter saw the U.S. economy’s strongest growth since Q3 2014 — one that certainly rose well above Q2 2016’s rate of 1.4 percent.
The sudden rise can largely be attributed to an increasing rate of consumer spending and, interestingly enough, a recent rise in soybean exports. Exports reportedly grew at the highest rate seen since the fourth quarter of 2013, driven by a surge in soybean exports after a lackluster soy harvest in Argentina and Brazil, said Reuters.
The Commerce Department further reported that the gross domestic income (GDI) increased by 5.2 percent in the third quarter, well above the 0.7 percent rate in the second quarter. The Commerce Department attributes the increase in GDP in the third quarter to positive contributions from personal consumption expenditures, exports, private inventory investment and federal government spending.
Additionally, profits from current production increased $133.8 billion in Q3 2016, in contrast to a decrease of $12.5 billion in the second quarter of 2016. Likewise, domestic financial corporations saw profits increase by $50.9 billion in the third quarter, compared with an increase of $5.6 billion in the second. Domestic nonfinancial corporations also saw a profit increase. Their profits reportedly rose $76.5 billion in Q3 2016, in contrast to a decrease of $56.1 billion in the second quarter.
The Commerce Department notes that consumer spending accounts for over two-thirds of U.S. economic activity and increased at a 2.8 percent rate in Q3 2016, above the initial estimate of 2.1 percent reported last month.