Companies such as Wal-Mart Stores Inc. are seeing the benefits as a strengthening labor market and gains in sentiment underpin consumer spending. The outlook for growth supports the Fed’s recent decision to complete its bond-buying program, and central bankers continue to monitor economic progress while deciding when to raise interest rates for the first time in the recovery.
“We probably have more momentum heading into the final quarter of the year,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, whose estimate of 3.8% growth was closest in the Bloomberg survey. “We’re probably on pace for another 3% to 3.5% growth in the final three months.”
Economists’ GDP estimates in the Bloomberg survey ranged from 2.8% to 3.8%.
The report wasn’t universally positive. Revised data for the second quarter showed the previously estimated increase in wages and salaries was cut almost in half and corporate profits last quarter rose less than in the prior three months.
Consumer spending, which accounts for about 70% of the economy, grew at a 2.2% annualized rate in the third quarter compared with the previously estimated 1.8%. The improvement was spread across durable and nondurable goods, including recreational vehicles and restaurant meals.