Revised data released by the Commerce Department on Wednesday unexpectedly showed the U.S. economy grew by more than previously estimated in the third quarter.
The report said real gross domestic product spiked by 2.9 percent in the third quarter compared to the previously reported 2.6 percent surge. Economists had expected the pace of GDP growth to be unrevised.
The upwardly revised jump came after GDP fell by 0.6 percent in the second quarter and slumped by 1.6 percent in the first quarter, signaling a technical recession.
Oren Klachkin, Lead U.S. Economist at Oxford Economics, said the upward revision shows the “economy had more momentum than anticipated and supports our plan to revise higher the forecast for growth in the final three months of this year and push the start of the recession next year back.”
The Commerce Department said the stronger than previously estimated growth reflected upward revisions to consumer spending and non-residential fixed investment.
Imports, which are a subtraction in the calculation of GDP, also decreased more than previously estimated.
Meanwhile, the report said the positive revisions were partly offset by a downward revision to private inventory investment.
“Looking ahead, we expect GDP will stay on an expansionary track in Q4 and Q1 but then register back-to-back contractionary readings in Q2 and Q3 of next year as the pressure from Fed rate hikes and tighter financial conditions prove too much to bear,” said Klachkin.
The Commerce Department also said the annual rate of growth in core consumer prices, which exclude food and energy prices, was unrevised at 4.9 percent in the third quarter.