After years of muddling along, the U.S. economy appears to be breaking into a sprint that could alter the political landscape heading into 2015 and beyond.

The latest evidence of strength came in a report on Tuesday showing growth expanded at a robust 5 percent pace in the third quarter of 2014, the fastest speed in over a decade. The news helped drive the Dow Jones Industrial Average above 18,000 for the first time ever in a bull market charge that began six years ago and shows no signs of slowing.


Plenty of risks to the U.S. economy remain including a collapse in the Russian economy, slowdowns in Europe and Asia, an unstable Middle East and the prospect of interest rate hikes coming next year. The housing market remains sluggish. But for now, the third-quarter-growth number shows that lower gas prices, an increase in employee wages and the healthy state of consumers and businesses bottom lines have lit a booster rocket under the American economy.

“This is a wow number. And it comes on the heels of another wow number, which was the November employment report,” said Mohamed El-Erian, chief economic adviser at Allianz. “Broad measures show the U.S. economy is finally building broad-based momentum and that is a good thing because it means Main Street will finally start to benefit a lot more.”

The broad-based growth began to show up in the November employment report, which showed a strong gain of 321,000 jobs. More important, it showed wages doubling their dismal recent pace of 0.2 gains, suggesting employers finally feel pressure to pay workers more.

For almost all of the recovery from the 2008 financial crisis, take-home pay has been stagnant, leading to deeply sour feelings among Americans about the economy and helping drive down President Barack Obama’s approval ratings and helping Republicans sweep to historic wins in the November midterm elections which handed them control of both houses of Congress.

But the latest numbers from Gallup show Obama’s approval rating already beginning to tick up slightly. A faster growing economy will likely continue that trend, boosting the president’s standing with the GOP Congress and possibly making it easier for Hillary Clinton — or another Democrat — to succeed the president in the 2016 presidential race. Republicans will have a tougher time tying any Democratic nominee to the “Obama economy” if that economy is growing at anywhere close to 5 percent.

Democrats wasted no time heralding the new report. The Democratic National Committee blasted out a news release headed simply “5.0!”

Jason Furman, chairman of the White House Council of Economic Advisers, was somewhat more understated but still touted the numbers in a blog post Tuesday morning. “The recent robust growth data indicate a solid underlying trend of recovery,” Furman wrote.

The White House has gotten burned before in touting strong economic numbers that then quickly gave way to periods of slower growth and stagnant wages. And Tuesday’s GDP report paints a picture of what the economy looked like several months ago, not what it looks like now or will in the future. But the contents of the report and more recent data all suggest that growth will continue at a solid clip in 2015. The gross domestic product report showed increased consumer spending, especially on health care, along with bigger investments by companies in buildings, and research and development. That should continue to lift growth for some time.

Sharply lower gas prices — driven by a glut of supply and a huge increase in domestic production — are also acting as a stealth stimulus, putting billions in the pockets of consumers who are using the money to buy more products and services.

Both U.S. businesses and consumers have much lower debt levels than they did at the end of the financial crisis in 2009. That means there is more room for spending to grow. As soon as companies see demand growing, they have billions of dollars in cash on their balance sheets as well as very robust stock prices to help drive more investment.

Other numbers Tuesday confirmed the improved state of the American consumer. The Thomson Reuters/University of Michigan consumer sentiment index hit 93.6, its best showing since January of 2007. In many respects, economists have been waiting for the GDP figures to catch up with other strong readings on employment and spending. A CNN poll released Tuesday found that for the first time in seven years, a majority of Americans rate the economy as “good,” a signal that long-held negative feelings are beginning to thaw.

“All of the data have been showing that the U.S. economy is really strong and slowly accelerating,” said Michael Obuchowski, portfolio manager at CONCERT Wealth Management. “A lot have people have disagreed with this saying housing is too slow, there are all these possible threats out there and everything else. But it’s very hard not to be optimistic now.”

Economists do not expect the 5 percent growth spurt to continue into 2015. But a somewhat slower pace would likely be welcome, given anything close to the third-quarter number could drive the U.S. Federal Reserve to speed up plans to boost interest rates — which have remained below zero for years — possibly putting the brakes on the economy.

“I hope it does not accelerate too much because that could stir up inflation fears and force the Fed to accelerate its actions,” Obuchowski said.

The strengthening economy — and an improving government fiscal picture — has already transformed the political conversation in Washington. The kind of federal debt and deficit scolding that helped drive the tea party movement to power is now significantly less potent.

While the longer-term deficit picture remains bleak with the expected glut of baby-boomer retirements, the short-term numbers are much stronger. Deficits are projected at below 3 percent of GDP through 2018 and expected to rise only slowly after that, suggesting that a faster growing economy coupled with recent spending restraint could eliminate deficits as a major topic of political conversation.

That would mean big renewed fiscal fights over the debt limit and spending — a hallmark of the past three years and part of the reason for the sluggish economy itself — could be much less likely.

A strengthening economy could also blunt some of the power of populist movements on both the left and right. These movements have been fueled by anger that while the top slice of the American populace has benefited greatly from a rising stock market and increased corporate profits, average workers have not felt many gains.

If the economy really picks up speed in 2015, it could make Hillary Clinton’s job of fending off criticism from populists such as Massachusetts Democratic Sen. Elizabeth Warren somewhat easier while making it slightly less difficult for an establishment Republican such as former Florida Gov. Jeb Bush to beat back a challenge for the GOP’s populist wing, led by Kentucky Sen. Rand Paul.

But none of these movements are likely to go away quickly. In addition to wages, they are driven by distaste for Wall Street and big corporations and concern that the system is rigged against the middle class. That hangover from the financial crisis will not evaporate with just a couple of strong GDP reports.

“If we have two years like the last couple of quarters and if wages continue to pick up, it would definitely be a plus for the incumbent White House party and whoever emerges as the Democrat who would replace Obama,” said David Wessel of the Brookings Institution. “But there are a lot of ‘ifs’ in that statement. And there are lots of workers on the sidelines and kids who graduated college working fast food jobs right now. And that’s not going away in a couple of quarters.”

Kendall Breitman contributed to this article.