The U.S. economy expanded at a three percent annual pace in July, August and September, about the same pace as the prior quarter.
Friday’s Commerce Department data surprised economists, who thought damage from two hurricanes would cut growth to a lower level. The data show the world’s largest economy is now about 2.3 percent larger than it was at this time last year.
Stuart Hoffman of PNC bank says the “solid” growth data is likely to help corporate profits and reinforce the U.S. central bank’s determination to raise interest rates in December. Josh Bivens of the Economic Policy Institute says the figures “overstate” growth, and he notes inflation is still below the Fed’s two percent target, making an interest rate hike unnecessary at this time.
Officials raise rates to fend off high inflation by cooling economic activity. Rates were slashed during the recession to bolster growth and employment.
Federal Reserve leaders gather Tuesday and Wednesday in Washington to debate interest rate policy. Most economists predict they will not raise rates until their next meeting in mid-December.
Next Friday, government experts will publish unemployment data for October. September’s rate was a low 4.2 percent.