5 Stocks To Buy As Q3 GDP Rises

Third quarter growth increased at a fastest pace than earlier expected in the latest sign that the slow but steady economic recovery was set to continue. Continual improvement in consumer expenditure, the bulwark of the economy, continues to be the primary engine of growth. Meanwhile, business investment also rose at a stronger pace than earlier expected.

Another factor leading to this upward revision was a spurt in exports. Among the more specific factors boosting growth has been an increase in consumer spending on services and higher investment in intellectual property and non residential construction. Since a solid reading for the fourth quarter is also expected, it makes good sense to pick up stocks gaining from these trends.

Fastest Growth in Two Years

The U.S. economy expanded at a much faster than expected pace between July and September, its best performance in two years. The “third” estimate by the Bureau of Economic Analysis showed that third quarter output of goods and services increased at an annual rate of 3.5%, higher than the consensus estimate of 3.3% increase, buoyed by stronger consumer spending. 

Consumers are doing their part to keep the economy growing, with outlays increasing at a 3% annual rate, up from the prior estimate of 2.8%. Additionally, fixed nonresidential investment, a gauge of business investment increased at a revised 1.4% rate, much stronger than the previous estimate of a 0.1% rise.

Spending on Services, Intellectual Property Boosts Growth

Delving into the details, while consumer expenditure on goods increased, the highlight of this particular estimate was an increase in spending on services. However, taken together, consumer spending did come in below second quarter’s pace of 4.3%.

 Meanwhile, expenditure on nonresidential structures, a measure which incorporates spending on gas and oil wells, surged by 12%. This was the sharpest pace recorded since the first quarter of 2014. According to the earlier estimate, nonresidential structural expenditure had increased by 10.1%.

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