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U.S. Third-Quarter GDP Up

FILE: US President Joe Biden speaks during an event on Micron's plan to invest in CHIPS manufacturing, at the SRC Arena in Syracuse, New York. Taken October 27, 2022.

The US economy grew more than initially reported in the third quarter this year, with government data released Wednesday reflecting upward revisions to retail spending and some forms of investment.

GDP growth in the July to September period came in at 2.9 percent, annualized, better than the 2.6 percent figure reported in October by the Commerce Department.

It was the first expansion this year, after two quarters of negative growth that deepened fears of a recession in the world's biggest economy.

The latest estimate "primarily reflected upward revisions to consumer spending and nonresidential fixed investment," the Commerce Department said Wednesday.

But this was partially offset by private inventory investment that was lower than expected, while imports decreased more than earlier estimated, the statement added.

The pick-up came days before midterm elections in the United States, in welcome news for President Joe Biden, but analysts have cautioned of a less rosy path ahead, saying that the leap seen in exports was unsustainable.

Economist Oren Klachkin cautioned that the headline figure "masks cracks beneath the surface." A downward revision to imports meant net trade offered an "even heftier" boost to growth, he added in a note.

He added that the report also offered an early look at how companies fared in the last quarter, noting that profits "fared relatively well" despite a challenging environment.

"Despite higher borrowing costs and prices, household spending - the driver of the economy - appears to be holding," added economist Rubeela Farooqi of High Frequency Economics in an analysis.

While economists expect this to be a positive trend in the near-term, they expect growth to follow a slower path as moves to cool the economy and bring down inflation bite.