The U.S. economy is growing at an increasingly rapid pace, government data released Tuesday shows, raising hopes that a slow-going American recovery is transforming into a far more robust expansion.
The 5 percent annualized growth reported Tuesday — for the three-month period ending in September — has led some analysts to believe that the U.S. economy could expand next year at a clip reminiscent of the booming late 1990s.
But while that period was driven by a surge in commerce unleashed by computers and the Internet, this expansion has many drivers. They include brisk consumer spending, low levels of personal debt, plunging oil prices, a soaring stock market and a federal government that for the first time in years is encouraging growth rather than detracting from it.
The period of relative prosperity — third-quarter economic growth was the best in 11 years — is even more striking because it contrasts with what is happening in much of the rest of the rich world, with Japan and countries in Europe teetering on the edge of recessions, if they are not already in them.
The better-than-expected economic numbers on Tuesday helped push the Dow Jones industrial average to another record high, with the index closing above 18,000 for the first time. The Standard & Poor’s 500-stock index also edged up and closed at a record high.
The numbers come as the economy has shown other signs of improvement — including an unemployment rate that is down to 5.8 percent. The economy created 321,000 jobs in November, part of the strongest trend in job growth since the late 1990s.
“We’ve had this two-steps-forward-one-step-back kind of expansion — a good quarter and a reversion — but it seems like this is different this time,” said Scott Anderson, chief economist at the Bank of the West.
Few expect a repeat of the third-quarter growth anytime soon. Though the United States has seen six months of booming expansion, including growth at a 4.6 percent annualized rate in the second quarter, the first quarter of the year was dragged down by a brutal East Coast winter that kept shoppers indoors.
Consumer spending, which accounts for about two-thirds of gross domestic product, has emerged as the economy’s driving force, increasing in the third quarter by 3.2 percent. Though incomes have stagnated for years among the middle and lower classes, there were nascent signs of wage growth last month, and households have reduced the bad debt that held them back in the wake of the financial crisis.
Consumer sentiment is at a post-recession high, and the nation has seen its best year of hiring in a decade and a half. Consumers have also gotten help from falling oil prices, which amount to a de facto tax cut that saves each driver hundred of dollars annually at the pump.
In a separate series of data released Tuesday, the Commerce Department said consumer spending was up an impressive 0.7 percent in November, compared with an increase of 0.2 percent in October. Much of that surge was attributable to the purchase of durable goods. such as cars and home appliances.
The positive indicators could nudge forward the Federal Reserve’s timetable for raising short-term interest rates. But the central bank has taken a cautious approach, and officials have suggested a rate hike will come sometime in the middle of next year.
If there is any reason for pessimism, the United States is still seeing sluggish growth in the housing market, and wages still have not shown consistent evidence of growth.
Other data released Tuesday indicated that capital-goods orders — computers, machinery, ships, long-haul trucks — were flat in November after falling in the previous two months. This measurement, which excludes notoriously volatile aerospace and defense orders, suggests that businesses are holding back on certain kinds of investment, even as interest rates stay low and companies have cash on their balance sheets.
Still, the macroeconomic signals are encouraging. In four of the past five quarters, U.S. GDP growth has hit or exceeded 3.5 percent. The past two quarters represent the best six-month stretch since 2003. There is growing consensus among analysts that a contraction in the first three months of 2014, when GDP shrank 2.1 percent, was a weather-related anomaly.
For quarterly GDP, which measures all goods and services produced, the U.S. government releases an initial estimate, and then two revisions. This was the second of those revisions. Previously, the Commerce Department had pegged third-quarter growth at 3.9 percent.
“We’re not going to stay at 5 percent, but those last five quarters, it’s a sign that we’ve worked through all the factors that have been dragging down the recovery,” said Gus Faucher, a senior economist at PNC Financial Services Group.
Economists say the U.S. economy appears to have enough momentum to weather slowdowns in Japan and China and lackluster growth in Europe. Oil prices, which were sliding this summer but began a free fall in November, will provide an even bigger boost in the fourth quarter, amounting to billions in savings for American consumers. PNC forecasts that annual GDP growth will end up at 2.3 percent in 2014 and then rise to 3.3 percent in 2015.
The nation’s economy is also helped by the fact that state and local governments have weathered a period of austerity and are again contributing to expansion. State and local expenditures and investment were up 1.1 percent annually in the third quarter, following a 3.4 percent expansion in the second quarter.
The federal government, too, after two years of tightening and sequestration, is again giving the economy a lift. Its spending was up 9.9 percent in the third quarter. Such figures can fluctuate heavily from quarter to quarter, but economists say the government is unlikely to be a drag over the next year.