The U.S. economy got a satisfying boost from solid consumer spending and business inventories in the last quarter, with the country’s gross domestic product growing at an annualized rate of 3.5 percent, as reported by the U.S. Commerce Department.
The initial estimate of economic growth in the July-September period released today revealed that consumer spending rose a healthy 4 percent, marking its strongest quarter in nearly four years. The category accounted for about 70 percent of economic output.
The robust showing follows an even better second quarter for the GDP, which saw gains at a rate of 4.2 percent, signaling top-performing consecutive quarters of growth since 2014.
It also comes ahead of the holiday shopping season, when sales are expected to climb. A recent forecast by consulting firm Deloitte revealed Americans will likely spend $1.1 trillion between November and January, an increase of 5 to 5.6 percent over last year.
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“Consumer sentiment and spending indicators provide a healthy outlook for retailers across channels, with strong expectations for store-based and online retailers,” said Rod Sides, Deloitte’s vice chairman and U.S. retail and distribution sector leader. “The leading retailers this holiday season could be the ones who are able to strike the right balance between innovation, experience and value that best engages the consumer and stands out in a busy season.”
Despite the faster-than-expected rate, it’s too early to predict spending. The volatility of the stock market, concerns over the trade war with China, the Federal Reserve’s interest rate hike and the potential end of a decade-long bull market could all impact consumer confidence.
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