The U.S. economy grew faster than initially thought in the third quarter, notching its best performance in two years, buoyed by strong consumer spending and a surge in soybean exports.
Gross domestic product increased at a 3.2 percent annual rate instead of the previously reported 2.9 percent pace, the Commerce Department said in its second GDP estimate on Tuesday. Growth was the strongest since the third quarter of 2014 and followed the second quarter's anemic 1.4 percent pace.
Growth was also lifted by upward revisions to business investment in structures and home building, underscoring the economy's solid fundamentals that further bolster the case for the Federal Reserve to raise interest rates next month.
Data ranging from housing to retail sales and manufacturing suggest the economy retained its momentum early in the fourth quarter even as exports appear to be faltering against the backdrop of renewed dollar strength and a fading soybean boost.
Economists polled by Reuters had expected that third-quarter GDP growth would be revised up to a 3.0 percent rate.
When measured from the income side, the economy grew at a 5.2 percent clip amid a rebound in corporate profits and rising household incomes. That was the fastest pace of increase in gross domestic income since the second quarter of 2014 and followed a 0.7 percent rate of increase in the second quarter.
The average of GDP and GDI, which some economists consider to be a more accurate measure of current economic growth and a better predictor of future output, increased at a 4.2 percent rate in the third quarter, the fastest pace in two years. That followed a 1.1 percent rate of increase in the second quarter.
Favorable growth profile
The third-quarter revision also showed a much more favorable growth profile for the economy. The boost from inventories was not as big as previously estimated, which suggests that businesses are not sitting on piles of unwanted goods.