Good news on the economy this morning:
The U.S. economy expanded at a much faster pace in the third quarter, growing 2.5% as consumers spent more on big-ticket items such as autos and businesses investment surged. Growth almost doubled the 1.3% rate of the second quarter. The U.S. was forecast to expand by 2.8% in the third quarter, according to a MarketWatch survey of economists. Consumer spending climbed 2.4%, the highest rate since the end of 2010, and business investment shot up 16.3%. Inventories, which subtract from gross domestic product, rose 1.9%. Excluding inventories, final sales of goods and services increased 3.6%. Inflation, as measured by the price index for gross domestic purchases, fell to 2.0% in the third quarter from 3.3% in the second quarter. Excluding food and energy, the index declined to 1.8% from 2.7%.
Particularly good news here is the spike in business investment. And note the timing: it seems to have been just as the debt ceiling battle was heating up, and then ending in a Republican semi-victory, that businesses decided to invest. It could be a coincidence, but my tentative interpretation would be that businesses saw the government finally getting its act together on long-term debt, and swung into investment mode.