The U.S. economy grew at its fastest pace in two years in the third quarter as a surge in soybean exports and a rebound in inventory investment offset a slowdown in consumer spending.
Gross domestic product increased at a 2.9 percent annual rate after rising at a 1.4 percent pace in the second quarter, the Commerce Department said on Friday.
That growth rate was the strongest since the third quarter of 2014 and beat economists’ expectations for a 2.5 percent expansion pace. Business investment improved last quarter, though spending on equipment remained weak.
But with exports and inventories accounting for almost half of the increase in output, economists warned the growth spurt would likely be temporary. Still, the data helped dispel any lingering fears the economy was at risk of stalling. Over the first half of the year, growth had averaged just 1.1 percent.
“While the economy may not be ready to take off, today’s GDP suggests the economic expansion is not at risk of ending,” said David Donabedian, the chief investment officer of Atlantic Trust Private Wealth Management in Baltimore.
Coming ahead of a Federal Reserve policy meeting next week, economists said the data was unlikely to change views that the U.S. central bank would wait until December – after the Nov. 8 presidential election – to raise interest rates.
The labor market is near full employment and price pressures have been steadily increasing, raising confidence that inflation will gradually move towards the Fed’s 2 percent target.
Less than two weeks before the election, the GDP report was seen as bolstering Democratic presidential nominee Hillary Clinton, who has positioned herself as the best candidate to continue the more than six years of growth under President Barack Obama.
“This is good news for the Clinton campaign, which has tied itself closely to the Obama administration’s record on the economy,” said Robert Murphy, an economics professor at Boston College.