Oct 29, 2016 06:00 AM EDT

US Economy News: Economic Growth In The US Sees A 2.9%; Fastest Growth In Two Years

The real gross domestic product (GDP) of the U.S. grew at an annual rate of 2.9 percent in the third quarter of 2016. This is the fastest economic growth in two years.

According to the latest news release of the Bureau of Economics Analysis, the increase in GDP is due to positive contributions from personal consumption expenditures (PCE), exports, and private inventory investment. Spending of the Federal government and the nonresidential fixed investment also contributed to the rise in GDP.

The rise in the third quarter GDP shows an upturn in private inventory investment and federal government spending. It also showed that exports accelerated and PCE increased a little.

These positive contributions have offset the negative contributions from residential fixed investment, state and local government spending and an increase in imports. There was a small decrease in state and local government spending and a large increase in imports.

The current-dollar GDP also increased in the third quarter to 4.4 percent or $20.1 billion. It increased to a level of $18,651.2 billion.

The New York Times reports that the latest GDP data is a significant improvement from the first half of 2016. Second quarter GDP increased 1.4 percent.

The third quarter data is also the best quarterly advance of the GDP in two years. Economists believe the gains were strong enough to reassure the Federal Reserve to raise interest rates in December.

PNC Financial Services Deputy Chief Economist Gus Faucher said the GDP is a "good, solid number. "The economy is growing at a decent clip. Consumer spending will continue to lead growth, and the fundamentals there remain positive," he said.

The recent data also shows that the U.S. economy continues on the same trajectory since the recovery following the Great Recession seven years ago: modest but consistent growth. The bigger picture shows that a steady growth, with a yearly growth in the range of 1.75 percent to 2.75 percent.

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