NEW YORK (CNN/Money) – U.S. economic growth surged in the third quarter of 2003 to the fastest pace in nearly two decades, the government said Thursday, in a report that was much stronger than most economists expected.
Gross domestic product (GDP), the broadest measure of economic activity, grew at a 7.2 percent annual rate in the quarter after growing at a 3.3 percent rate in the second quarter, the Commerce Department reported. Economists, on average, expected GDP growth of 6 percent, according to Briefing.com.
“This is obviously an extraordinarily strong report, led by the consumer, but also with good signs about the state of the business sector and business confidence,” said Lehman Brothers economist Drew Matus.
The burst of GDP growth was led by a 6.6 percent growth rate in consumer spending, the fastest pace since 1988. Consumer spending grew at a 3.8 percent pace in the second quarter.
Child tax credit checks and lower rates of income tax withholding helped fuel the third-quarter spending surge, enabling the Bush administration # which pushed for tax cuts earlier this year # to take a victory lap Thursday morning.
“Today’s report on real GDP in the third quarter shows that the president’s economic policies are having a positive impact on the economy,” Treasury Secretary John Snow said.