SARNIA: A hike in US economic growth, the stock rose to record highs , and put space between the US and economies that are struggling around world.
Fuelled by hiring gains, cheaper petrol and rising confidence, consumers and businesses drove growth to a sizzling 5% annual rate last quarter.
Though the economy is likely cooling a bit, its solid pace is brightening hopes for 2015.
The economic strength could also shape the Federal Reserve’s timetable for raising interest rates from record lows.
The government’s third and final estimate of growth for the July-September period was the strongest for any quarter in 11 years.
The result cheered investors. The Dow Jones industrial average ended the day up about 64 points to 18,024, the first time it has surpassed 18,000.
In its report today, the government sharply upgraded third-quarter growth from its previous 3.9% estimate. Much of the increase came from consumer spending on health care and business spending on structures and software.
The economy has been benefiting from sinking energy prices, which have helped keep overall inflation ultra-low.
Petrol prices have fallen for 88 straight days, according to AAA, the longest consecutive decline on record.
Cheaper fuel has acted like a tax cut to free up money for Americans to spend on other items, including cars, clothes and appliances.
Last quarter’s growth was the fastest since summer 2003, and it followed a 4.6% annual rate in the April-June quarter.
The government separately reported today that in November, consumer spending rose the most in three months and income by the most in five months. Both figures brightened hopes for the 2015 economy.
“After four years of rocky recovery the US economy is now hitting its stride with a notable acceleration in growth,” said Gus Faucher, senior economist at PNC Financial Services Group.
“Growth should remain good next year, with lower gasoline prices a big plus for consumers.”
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