The nation’s economic engine revved up this summer after a dismal first half of the year, growing at its fastest pace since 2014, the Commerce Department said Friday.
The nation’s total economic output, also known as gross domestic product, expanded at a 2.9 percent annual rate from July through September. The figure beat analyst expectations and was more than twice the lackluster 1.4 percent annual rate in the second quarter of the year.
Fed officials and economists had expected economic growth to improve in the third quarter. Still, the economy is on pace for another subpar year in the slow recovery from the Great Recession, with growth so far in 2016 running below 2 percent.
A sharp rebound in business investment and exports helped fuel the third-quarter rebound, the Commerce Department said.
Gross private domestic investment increased at a 3.1 percent annual rate, after declining at a 7.9 percent pace in the previous quarter. It was the first quarterly increase in a year.
U.S. exports, which have been hurt by the strong dollar, grew at a 10 percent annual rate in the third quarter, the best performance since 2013. Exports had grown at just a 1.8 percent rate from April through June and had declined in each of the three previous quarters.
The pace of consumer spending slowed to a still-solid 2.1 percent annual rate in the third quarter. That was down from an unusually strong 4.3 percent rate in the previous quarter.
Fed officials are monitoring the economy closely to determine if it is strong enough to warrant another small increase in the central bank’s benchmark short-term interest rate.
Fed Chairwoman Janet L. Yellen said last month that the case for a rate hike had strengthened in recent months and that policymakers were “generally pleased” with the trajectory of the U.S. economy.