WASHINGTON (12/29/14)--U.S. GDP growth surged by 5% in the third quarter, according to the third and final estimate by the Bureau of Economic Analysis.
The initial reading for 3Q came in at 3.5%, but revisions to service spending, investments and inventories helped drive the final number higher.
GDP's third-quarter performance marks the first time since 2003 that the economy has seen GDP increase by more than 4% in consecutive quarters. In 2Q, GDP advanced by 4.6%.
"Third-quarter growth was the best for GDP since 2003 and is even more impressive coming on the heels of a strong second quarter," said Scott Hoyt, Moody's analyst (Economy.com). "Trend growth has accelerated to at least 3%, with the economy growing at that pace or better in four of the past five quarters."
Consumer spending added 2.2% to growth, fixed investment contributed 1.2%, net exports added 0.8% and the federal government added 0.7%, according to Moody's.
"Further boosting both consumer spirits and the economy's prospects is the surprising slide in oil prices," Hoyt said. "At near $60 per barrel, crude prices have fallen about 40% since summer. There will be some offset to growth from weaker energy exploration and development, but this should be modest."
Final sales, which exclude inventories' impact on GDP, also climbed 5% for the quarter, up from 3.2% in the second quarter. The increase marks the biggest jump in final sales since 2006.
The personal consumption expenditures index showed inflation slowed in the quarter, meanwhile, rising only 1.2% after a 2.3% gain in the second quarter. Excluding food and energy prices, inflation rose 1.4% after a 2% climb in the second quarter.
Real disposable income increased 2% after a 3.1% jump in 2Q. Savings in the third quarter rose 4.7%, a small step back from the second quarter, and gross domestic income rose 4.7% after a 4% rise in the second quarter.
Additional U.S. economic data released last week: