By JOSH JOHNSONReuters September 19, 2018 09:30:53U.
S. economic growth, already at its fastest pace in nearly a decade, was at its strongest level in more than a year on Wednesday, even as the stock market’s rout in recent days dragged on.
The Commerce Department said gross domestic product rose by a revised 3.7% in the third quarter, a pace that was far above the previously expected 3.1% expansion.
That was its best reading since the first quarter of 2019.
The economy is expected to expand at a faster rate in 2021 than it did in 2018, but the pace is likely to lag the 2.9% growth the Fed’s forecast in March for the first half of 2021.
The economy grew at an annual rate of 2.3% in Q3, the second-highest pace since the fourth quarter of 2016.
The third quarter was the best since the third quarters of 2014 and 2017.
The last time the third-quarter expansion was this strong was in the second quarter of 2009.
“The robust growth we are seeing over the past year has continued to generate solid job growth and an improving employment picture,” said Kevin Hassett, chief economist at Capital Economics.
The Fed’s monetary policy committee will likely vote later on Wednesday to raise its benchmark interest rate for the second time in as many months, to 0.25% from its current 0.2%.
That will be the third time since March 2017 that the central bank has raised rates, the first time in the last five months.
The central bank’s monetary easing has also boosted consumer spending and employment.
“We are seeing the Fed taking action that is going to lead to sustained economic recovery,” said Paul Ashworth, chief economic adviser at the Bipartisan Policy Center, a Washington think tank.
The unemployment rate fell to a nine-year low of 4.9%, below the 4.8% it recorded in December and the 5.2% it reached in April 2017.
The labor force participation rate also dropped to 63.5%, its lowest since March 2016.
The number of people working part-time fell to the lowest level in nearly six years, according to data released Wednesday by the Labor Department.
The report also showed that U.S.-born residents and those who had been born abroad also contributed to the improvement in the labor market.