U.S. Economy Posts Strongest Growth in 11 Years
Commerce Department said the U.S. economy expanded at a 5% seasonally adjusted annual rate in the third quarter, its strongest pace in 11 years, and reported that consumer spending accelerated last month amid rising incomes and falling gasoline prices.
A big question remains: Can consumers sustain the momentum into 2015?
There still are signs the economy is far from full health. Inflation remains low and has sagged lower in recent months, largely because of falling oil prices. Low inflation and sagging commodities prices are a possible signal of weak underlying demand, particularly overseas. Wage growth remains sluggish, though there have been glimpses in recent data of a potential pickup. Gains in labor productivity have been slow.
Weakness around the world could reduce demand for U.S.-made products, and a stronger dollar could further depress exports by making them more expensive overseas.
Fed officials expect full-year growth will come in below 2.5%, marking 2014 as only a slight pickup from recent years.
But officials see growth strengthening to between a 2.6% to 3% rate in 2015.
The housing market has yet to return to prerecession levels despite low mortgage rates and strong job growth. Sales of new single-family homes fell for the second straight month in November and are essentially unchanged this year from 2013, the Commerce Department said Tuesday.
Inflation, meanwhile, remains tame. The Fed’s preferred gauge, the Commerce Department’s personal consumption expenditures price index, slipped to a 1.2% annual gain in November from 1.4% in October. It was the 31st consecutive month that inflation undershot the central bank’s 2% target.
The unemployment rate was 5.8% last month, down from 7% a year earlier, according to Labor Department data.
Personal income rose 0.4% last month from October and climbed 4.2% from a year earlier, the largest annual income gain since December 2012, the Commerce Department said.
Eric Morath And , Ben Leubsdorf, Jonathan House, Kathleen Madigan and Josh Mitchell contributed to this article.