Money & Industry

Surge in U.S. Economy in Q3 2016 the Best in Two Years

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Surge in U.S. Economy in Q3 2016 the Best in Two Years
Bernadine Racoma

In Q3 2015, the GDP had a 2% growth. It went down to 1.4% in Q4, and further to 0.8% in Q1 2016, with a slight increase to 1.4% in Q2. Based on the U.S. Department of Commerce data released on Thursday, the GDP for Q3 went up to 3.5%. This is the best performance of the U.S. economy in the last two years.

The projection was 3.2%, but it was helped by the revisions in intellectual property products and business investments. With these as defining factors that boost the economy’s fundamentals, the Federal Reserve raised interest rates the previous week.

A deeper look

If the growth is measured based on income, the figure is better, showing that the economy had a 4.8% growth. Consumer spending, which accounts for over two-thirds of the economic activity in the country, likewise increased at a 3.0% rate in Q3. There was a slight increase from the 2.8% rate that was reported in November. Despite this, it is still considered slow, since the percentage pace in Q2 was 4.3.

Spending on gas and oil wells was also on the rise. It showed a 12% rate, which is the fastest since Q1 2014, and like other spending rates, was previously reported to be lower at 10.1% rate only.

Growth in export

The previous report regarding the export industry showed that the pace was at 10.1% but it went down slightly to 10%. This is still the fastest pace since the last quarter of 2013. It is still a good indicator, with the boost coming from soybeans exports. The U.S. soybean farmers benefited from the poor harvest of soy crops in Brazil and Argentina.

Business inventories accumulated at a $7.1 billion rate in the quarter, instead of the $7.6 billion rate reported in November.

Generally speaking, the economic growth in the U.S. remains the same, although the spike in personal expenditures is a big factor in the growth, according to the Department of Commerce. Consumer spending’s share in the U.S. economy is about 70%, and while there was a slight increase, it was still lower than the percentage reflected in the second quarter data.

Consumer spending is getting stronger, supported partly by the improvement of the balance sheets of many households, with their household debt service at a low level. Household debt payment is part of their disposable income.

This is the third and final reading of the GDP for Q3 2016. In the first forecast, the percentage rate was at 3.2. The second forecast showed a slight increase, registering a 3.3% pace rate. The final reading, which was released on December 22, placed the GDP growth at 3.5%. This will be good for the US dollar, as the final reading showed an increase from the previous two forecasts.

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