Businesses have begun to invest again

Growth in the three months to September was an annualised 8.2%, the Commerce Department said, as business and consumer spending both soared.

The figure - the best for almost two decades - far outstrips the first estimate released last month of 7.2%.

A separate report also showed a big jump in consumer confidence, as hopes of a recovery in the job market grew.

Profit boost

Although analysts had been expecting the initial growth estimate to be revised upwards, the new figure comfortably beat forecasts.

The Commerce Department figures also showed company profits growing at their best rate for 10 years, rising by more than 10%.

Consumer confidence is rebounding

The profit numbers - a turnaround from the 5% contraction in the three months to June - are encouraging for the White House, since the Federal Reserve has said it sees corporate profitability as key to a sustainable recovery.

Aside from business investment on equipment and software, the breakneck expansion was driven by lower cuts in businesses' inventories and spending on new homebuilding.

Business spending was up 14%, double that of the previous three months, helped by continuing rock-bottom interest rates of just 1%.

Individuals and households were also contributing to the boost, albeit at a slower rate - 6.4% - than previously predicted.

Forecasters believe the increase is the result of a one-off boost caused by tax cuts, and is unlikely to happen again.

Growth for the full year is generally thought to be around 4%.

Turnaround

The latest survey from private research firm the Conference Board saw its confidence index jump to 91.7 in November, up from a revised 81.7 in October.

Signs of an improvement in employment prospects were behind the rise.

"Consumers believe a slow but sure labour market turnaround is under way," said Lynn Franco of the Conference Board.

The findings could be significant, as the jobs market is being seen as a key test for next year's presidential election, since a pickup in employment may be necessary to sustain consumer spending.

Recent figures have indicated a slight improvement in employment, with October showing the jobless rate inching downwards to 6%.