The U.S. economy grew faster than initially thought in the third quarter though economists are anticipating a slowdown in the final quarter of the year.
Gross domestic product increased at a 3.5% annual rate instead of the previously reported 3.2% pace, the Commerce Department said in its third GDP estimate on Thursday.
Economists polled by Reuters had expected that third-quarter GDP growth would be revised up to a 3.3% rate. The highest growth rate in two years was driven in part by solid consumer spending and a jump in soybean exports.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.0% rate in the third quarter, an upward revision from the 2.8% pace reported last month.
But that was still a slowdown from the second quarter’s robust 4.3% pace. The Commerce Department also reported Thursday that spending rose only 0.2% in November after increasing 0.4% in October.
“The fourth quarter is coming in soft,” Ryan Sweet, a senior economist at Moody’s Analytics, told Reuters. “The economy is going to end the year on a disappointing note, but we should see growth accelerate in the first half of 2017.”
Personal income was flat last month as wages and salaries fell 0.1% in November after increasing 0.5% in October. With consumer spending outpacing incomes, savings fell to their lowest level since May 2015.
But according to Reuters, “While consumer spending might be cooling, business investment is perking up after a prolonged slump.”
In a third report, the Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.9% last month after an unrevised 0.2% gain in October.
The gain suggests some of the oil-related drag on manufacturing is starting to fade amid a pickup in Gas and oil well drilling over the past several months, Reuters said.
Economists had forecast so-called core capital goods rising 0.3% in November.