WASHINGTON, Oct 26 (Reuters) – The U.S. economy grew almost 5% in the third quarter, again defying dire warnings of a recession, as higher wages from a tight labor market helped to fuel consumer spending and businesses restocked at a brisk clip to meet the strong demand.
The fastest growth pace in nearly two years reported by the Commerce Department’s Bureau of Economic Analysis on Thursday in its advance estimate of third-quarter gross domestic product was also spurred by a rebound in residential investment after contracting for nine straight quarters.
Government spending picked up. But business investment dipped for the first time in two years as outlays on equipment like computers declined and the boost faded from the construction of factories related to a campaign by President Joe Biden’s administration to encourage more semiconductor manufacturing in the United States.
Though the blockbuster performance over the summer is likely not sustainable, it showcased the economy’s stamina despite aggressive interest rate increases from the Federal Reserve. Growth could slow in the fourth quarter because of the United Auto Workers strikes, the resumption of student loan repayments by millions of Americans and the lagged effects of the rate hikes.
The report also showed underlying inflation subsiding considerably last…
