US gross domestic product (GDP) grew at an annualized rate of 2.9% in the third quarter, the fastest in two years, according to the advance estimate released on Friday.
Economists had forecast that the value of everything the US produced and provided a service for rose by 2.6%.
The boost to US growth came from a jump in exports — mostly of soybeans — and inventories. Business investment in equipment, however, contracted for a fourth straight quarter.
Personal consumption, the key driver of growth, slowed to a growth rate of 2.1%, worse than the estimate for a slump by 2.6%. Some economists expect consumption growth to slow even more if inflation rises and eats into real income.
Core personal consumption expenditures, a measure of inflation that tracks prices paid without the volatility of food and energy costs, grew 1.7% (1.6% expected).
Because this is an advance estimate based on incomplete data, it will be revised two more times this year, and could still be adjusted in annual revisions next year.
After traders saw the data, they increased bets that the Federal Reserve will raise interest rates at its December meeting. Fed fund futures, which reflect their wagers, priced in around 85% odds.
The Fed’s policy-setting committee will meet from November 1 -2, but traders don’t think it will raise rates because the presidential election is the following week.