US GDP growing 4.1% annually

US GDP grew at 4.1% annual rate during the third quarter of 2013, according to a third estimate released by the Bureau of Economic Analysis, part of the Department of Commerce.

This is an increase from the second estimate of 3.5% GDP growth.

The third estimate revised US GDP growth upward because of higher personal consumption expenditures (consumer spending) and non-residential fixed investments.

Consumer spending for Q3 2013 was revised upward from 1.4% to 2%. Uncertainty regarding budget squabbling in Washington does not appear to have dampened consumer spending.

US GDP growth during Q3 2013 reflected positive contributions from local and state government spending, residential fixed investment, non-residential fixed investment, exports, personal consumption expenditures (PCE) and private inventory investment, that were partly offset by a negative contribution from federal government spending.

US GDP grew at its fastest rate in 2 years

During the third quarter of this year the US economy grew at its fastest rate in two years. The economic recovery, which has been tenuous, appears to be becoming more solid going into 2014.

Since US GDP growth started in 2009, this is only the second time the output for goods and services have increased by more than 4%.

Josh Mitchell and Neil Shah wrote in the Wall Street Journal that the construction of homes has been stepped up, manufacturers have increased production “and hiring continues at a steady pace.” They quote several economists who expected 3% annualized growth during the second half of 2013, compared to 1.8% during the first six months.

“2014 can be a breakthrough year for America,” President Obama

President Barack Obama said in his last press conference of the year from the White House briefing room:

“In 2013, our businesses created another 2 million jobs, adding up to more than 8 million in just over the past 45 months. This morning, we learned that over the summer, our economy grew at its strongest pace in nearly two years. The unemployment rate has steadily fallen to its lowest point in five years.”

“And you add that all up and what it means is we head into next year with an economy that’s stronger than it was when we started the year. More Americans are finding work and experiencing the pride of a paycheck. Our businesses are positioned for new growth and new jobs. I firmly believe that 2014 can be a breakthrough year for America.”

In an interview with the BBC Sal Guatieri, of BMO Capital Markets Economics, said “The strong Q3 growth performance vindicates the Fed’s decision to begin tapering QE3. It also suggests the economy is poised for stronger growth in the new year than the middling 2% pace of the past year, meaning the tapering process will continue.”