The United States' Gross Domestic Product (GDP) grew by five percent between July and September of this year, making it the strongest economic quarter since 2003, the Department of Commerce's Bureau of Economic Analysis revealed on Tuesday.
"The recent robust growth data indicate a solid underlying trend of recovery," said Chairman of the Council of Economic Advisers, Jason Furman, in a statement released by the White House.
"Indeed, the strong growth recorded in each of the last two quarters suggests that the economy has bounced back strongly from the first-quarter decline in GDP, which largely reflected transitory factors like unusually severe winter weather and a sharp slowdown in inventory investment," he added. "Consumer spending, business investment, and net exports all remained positive contributors this quarter." The real GDP was revised to reflect a 1.1 percent increase since the last estimate made in November.
"Most of the upward revisions were in personal consumption and business investment, the most persistent and stable components of GDP," Furman noted. "The contributions of consumer spending and business investment were revised up 0.7 and 0.2 percentage point, respectively, including increased contributions from health care and other services, nonresidential structures investment, and intellectual property investment." American households also increased their spending, as personal consumption expenditures rose 3.2 percent, the figures showed.
"With real wages rising for two years, consumer sentiment at its highest level since 2007, and households having substantially deleveraged, consumption growth continues to trend upward," Furman said. "Consumers cite improved employment and wage expectations-along with declining gasoline prices-as major drivers of improved economic optimism." Meanwhile, the current account balance - which "is a measure of net transactions between the United States and the rest of the world, including our trade balance and other income" across borders, Furman explained - is in a deficit "near its lowest level since the late 1990s." That deficit is at 2.5 percent of GDP, down more than 6 percent in the fourth quarter of 2005.
"The smaller deficit reduces our reliance on foreign borrowing, encouraging a more sustainable recovery," he said.
Finally, the real private domestic final purchases (PDFP) - which is the sum of consumption and fixed investment - grew by 3.3 percent over the last four quarters, "a faster four-quarter growth rate than real GDP," Furman noted.
"Real PDFP growth is generally a more stable and forward-looking indicator than real GDP because it excludes highly volatile components like inventory investment and net exports," he said. "In the third quarter, PDFP grew a bit more slowly than GDP, but on balance, it has risen faster over the past year and continued its historical pattern of more steady growth."