The U.S. economy grew 3.9 percent in the third quarter, surpassing all economic expectations based on stronger spending from consumers and businesses, the Commerce Department announced on Tuesday.
The adjusted gross domestic product, the economic measuring stick which determines the value of all goods and services produced within the United States, from July through September is up from the 3.7 percent that was estimated previously.
The 3.9 percent rate of growth was a jump from the 3.3 percent that was seen during the second quarter. Most economists were predicting that economic growth would remain at 3.7 percent once the actual numbers came in.
Yet, a surprising increase in consumer spending, which grew 5.1 percent making it the best it has been since the fourth quarter in 2001, and strong sales of business equipment and software, expanding at a stout 17.2 percent, spurred the economy during the third quarter.
In fact, the economy even added 337,000 new jobs in October, the best mark since March. Nearly 2 million new jobs have been added to the economy since August 2003 following President George W. Bush's tax cuts.
Economists believe there will be 200,000 new jobs created in November as the unemployment rate continues to drop to 5.4 percent, down from the 5.5 percent in October. The actual employment numbers will be released on Friday.
The improvement in the economy has caused Federal Reserve Chairman Alan Greenspan to raise interest rates, which have been at historic lows over the past few years, four times in 2004. In fact, many economic analysts are expecting yet another quarter percent rate increase to 2.25 percent on December 14 when the Federal Reserve meets again.
The rate of growth during the fourth quarter is expected to be near 4 percent, according to many economists. The actual numbers will be released in late January.
Even inflation has been kept in check despite concerns over energy prices. Rising just 0.7 percent during the third quarter following the 1.7 percent rise in the second quarter, it was the lowest inflation reading in 42 years.
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