While business investment remains a weak spot, solid labor-market progress and steady household purchases kept growth on track ahead of the holiday shopping season. The figures are likely to reinforce projections for Federal Reserve policy makers to raise the benchmark interest rate in December for the first time this year, with inflation getting closer to the central bank's goal.
“Growth is going to remain heavily reliant on the consumer, but consumers are in very good position to lead that charge,” with job gains, wage increases and low debt levels, said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. “Overall, it’s an encouraging sign for the path ahead.”
GDP represents the value of all goods and services produced in the economy. Analysts’ projections for the latest growth figure ranged from 2.8 percent to 3.3 percent. This is the second of three estimates for the quarter before annual revisions in July.
The revised growth figure mainly reflected changes to the pace of consumer spending and residential investment. Household purchases, which account for almost 70 percent of the economy, grew at a 2.8-percent annualized rate, stronger than the 2.1-percent pace initially estimated.
The adjustment reflected data from the Alcohol and Tobacco Tax and Trade Bureau, as well as figures on monthly retail sales, motor vehicle registrations and electricity usage, according to the Commerce Department.
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