The Bureau of Economic Analysis surprised analysts by revising its economic growth estimate to a healthy 3.1% growth rate for the third quarter (July - September) 2012. This was higher than the initial GDP growth rate of 1.7%, and the second estimate of 2.7%. What changed?
The BEA final estimate is based on additional data that came in over the last month. In this case, businesses reported even higher levels of consumer spending and exports. That's on top of growth in durable goods, consumables (especially clothing and footwear) and government spending, (especially for defense.) (Source: BEA, GDP Third Estimate, December 20, 2012)
What It Means to You
This growth is for the third quarter, which was before the election and during a period of great uncertainty. Now that the election is over, a new area of uncertainty is the fiscal cliff negotiations. However, growth is in the healthy range despite the odds. That means it will really take off once the cliff is resolved. That's especially true now that the housing market is strengthening. The powerhouse that is the U.S. economy is heading solidly into the expansion phase of the business cycle -- at long last!