GDP grows 2.7%, beats estimates
The economy grew at a 2.7 percent annual rate from July through September, much faster than first thought. The strength is expected to fade in the final months of the year because of the effects of Superstorm Sandy and uncertainty about possible tax increases and government spending cuts.
The Commerce Department said on Thursday that growth in the third quarter was significantly better than the 2 percent rate estimated a month ago. And it was more than twice the 1.3 percent rate reported for the April-June quarter.
The main reason for the upward revision to the gross domestic product was that businesses restocked at a faster pace than estimated. That offset weaker consumer spending growth.
GDP measures the nation's total output of goods and services — from restaurant meals and haircuts to airplanes, appliances and highways.
Most economists said economic growth is slowing to below 2 percent in the October-December quarter. That's considered too weak to rapidly lower the unemployment rate.
Paul Ashworth, chief U.S. economist at Capital Economics, said companies are probably restocking more slowly. Businesses typically cut back when they think consumers will spend less. Consumer spending drives roughly 70 percent of economic activity.
Consumer spending grew at a weaker 1.4 percent rate in the third quarter, down from the 2 percent rate estimated a month ago and nearly in line with the 1.5 percent rate in the second quarter.
Economists cite two reasons for the anticipated weakness in consumer and business spending.
Sandy halted business activity along the East Coast in late October and November. And spending may weaken in the final weeks of the year, if lawmakers and Obama fail to reach a “fiscal cliff” deal.
Companies are “likely thinning inventories just in case Congress fails to do its job, which is always a possibility,” said Joel Naroff, chief economist at Naroff Economic Advisors.
A separate report on Thursday showed the negative impact of the superstorm is starting to fade. The number of Americans seeking unemployment benefits fell 23,000 to a seasonally adjusted 393,000 last week, the Labor Department said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Consol, Noble expect at least $325 million from partnership’s IPO
- UPMC buying New Castle-based Jameson Health System
- Douglas Laboratories sells Klean Athlete: products free from banned substances
- FedEx to add 50,000 seasonal jobs
- Mylan CEO Bresch sets sights on growth
- U.S. Steel to restructure Canadian subsidiary, halt 2 U.S. expansion projects
- Tobacco growers forced to find profits as buyout checks end in October
- Casing cracks, not fracking, blamed for gas in water wells
- 2 top executives at Dick’s Sporting Goods to retire
- Congress: Safety agency mishandled GM recall
- American Airlines agents vote to join union