US economy growing at breakneck speed (video)

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Powered by robust business spending, the U.S. economy grew at its fastest pace in more than two years in the third quarter, according to a CNBC report, which notes that sweeping tax cuts passed by Congress this week will likely add to the momentum.

Gross domestic product expanded at a 3.2 percent annual rate last quarter, according to a third-quarter estimate released by the Commerce Department on Thursday. That number was slightly down from the 3.3 percent rate reported last month, but it was still the fastest pace since the first quarter of 2015 and was a pickup from the second quarter’s 3.1 percent rate, the report noted.

For the first time since 2014, the economy grew at 3 percent or more for two straight quarters, CNBC reported.

The good news comes as President Donald Trump prepares to sign the new tax bill, which is being lauded as the largest overhaul of the tax code in 30 years. The legislation contains $1.5 trillion in tax cuts, which experts say could give the economy a “modest economic boost.”

The corporate income tax rate will be slashed to 21 percent from 35 percent in the new bill, and the fiscal stimulus will come while the economy is at full employment, which raises the risk of it overheating, according to the report.

Growth in the third quarter was also boosted by an accumulation of unsold goods and a rebound in government investment.

Growth in consumer spending, which accounts for more than two-thirds of the U.S. economy, was revised down by one-tenth of a percentage point to a 2.2 percent rate in the third quarter, the report revealed. Consumer spending increased at a healthy 3.3 percent rate in the second quarter.

Consumer spending accelerated in October and November thanks to steady wage gains and household savings.

The report also noted, “After-tax corporate profits surged at a 5.7 percent rate last quarter instead of the previously reported 5.8 percent rate. Profits rose at only a 0.1 percent pace in the second quarter. Undistributed profits jumped at a 13.9 percent rate after declining for two straight quarters, suggesting that companies were anticipating deep tax cuts.”

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