US economy grows at 2% during Q3

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The US economy grew by 2 per cent during the third quarter, the US Bureau of Economic Analysis has revealed in its first estimate.

The growth in the economy was an improvement on the 1.3 per cent GDP growth reported during the second quarter of the year.

According to the Bureau of Economic Analysis, the economy benefited from positive contribution from personal consumption expenditure (PCE), federal government spending and residential fixed investment.

Growth was negatively impacted by exports, non-residential fixed investment and private inventory investment.

Capital Economics chief US economist Paul Ashworth says: “With less than two weeks to go before the election, the conspiracy theorists will be up in arms about the reported 9.6 per cent surge in Federal spending, which contributed as much as 0.7 per cent to overall GDP growth.

“In general, Federal spending is likely to return to its downward trend next year and could shrink even more sharply if the fiscal cliff sequestration cuts aren’t averted.”

A second estimate for the third quarter, which will be based on more complete data, will be released on 29 November.