WASHINGTON — Gross domestic product increased at a 3.5% annual rate from July through September as consumer spending drove economic growth to its highest rate in more than two years, the Commerce Department reported yesterday.
Consumer spending, which accounts for about 70% of GDP, increased 3.4% at an annual pace, the largest increase since the first quarter of 2007.
Consumption of durable goods jumped at a 22.3% annual rate, the largest increase since the fourth quarter of 2001, aided in part by the “cash for clunkers” program, the report showed.
Motor vehicle output added 1.66 percentage points to the GDP.
Core personal consumption expenditures, which exclude food and energy prices and is the Federal Reserve’s preferred measure of inflation, increased 1.4% in the third quarter after a 2.0% gain in the second quarter.
Economists polled by Thomson Reuters expected GDP to increase 3.2% at an annual rate and for the core PCE index to be 1.4%, according to the median estimate.