GDP Growth Revised Upward for Quarter

The U.S. economy grew more briskly in the third quarter than first thought, with robust car sales helping to more than triple the weak second-quarter pace, the government said Tuesday.

However, two other reports showed that new-home sales fell in October and consumer sentiment posted a smaller-than-expected rise this month.

U.S. gross domestic product, a measure of all output within the country’s borders, rose at a revised 4.0% annual rate in the July-September period after an anemic 1.3% gain in the preceding quarter, the Commerce Department said.

Commerce originally had estimated the economy expanded at a slower 3.1% pace in the third quarter.

However, a buildup in business inventories was one of the main drivers of the upward GDP revision and there was a decline in corporate spending, originally reported as rising a bit. Economists said these were indicators of slower growth ahead.

A increase in consumer spending, up at a 4.1% clip after a 1.8% gain in the second quarter, accounted for most of the quarter-to-quarter improvement in the economy’s performance. A sharp gain in auto sales played a big role.

Separately, the private Conference Board reported that its consumer confidence index rebounded in November from a nine-year low, but the rise to 84.1 from 79.6 in October was smaller than economists had expected and the index remained well below September’s reading of 93.7.

In another report, the Commerce Department said sales of new single-family homes in October slipped from September’s record pace, dropping 4.5% to a 1.01-million-unit annual rate, still the third-best monthly sales rate on record.