Economy grows at fastest pace in more than two years
The US economy expanded at the fastest pace in more than two years, the government reported on Wednesday, spurred on by an uptick in spending from consumers and investment from business.
The positive report comes on the heels of the government releasing its August report on unemployment. Analysts expect that the rate of people unemployed will hold steady at 4.3 percent — the lowest level since March 2001.
The second revision of the gross domestic product showed a 3 percent annualized growth rate from an initial 2.6 percent pace for the second quarter. Analysts were expecting a 2.7 percent revision for the first full three-month period under President Trump.
The news out of the Commerce Department made some economists downright giddy after the last decade of mostly muted growth.
“That’s right, growth is back even before all those tax cuts, tax reforms, softer regs and infrastructure spending could make their way through Congress and see the light of reality,” Chris Rupkey, chief financial economist at MUFG, said in a note. “Growth is back!”
Corporate America also got a better quarter overall than during the first three months of the year. Nonfinancial companies saw profits increase 1,605 percent, to $64.8 billion, compared with the $3.4 billion in profits during the first quarter. And financial companies stemmed their losses, down $29.4 billion compared with $40.7 billion in the first quarter, according to the government.
The GDP news sent markets up on an otherwise quiet day for news.
The Dow Jones industrial average rose 27 points, to 21,892.43. The Nasdaq gained 66 points, to 6,368.31, reaching the highest level since Aug. 8. The S&P 500 index picked up 11 points, to 2,457.59.
This was only the 10th time since 2009 that GDP growth was at or above a 3 percent annualized level, according to the report.
While the news out of the government was mostly positive, billionaire Warren Buffett viewed it skeptically.
The chairman of Berkshire Hathaway questioned the math behind the government’s statistics, since it’s not based on yearly numbers in the way that corporations measure quarterly growth.
“I would guess we’re in about a 2 percent growth economy now,” Buffett said on CNBC.