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US economy grows annual 3.1% in Q3 but may be slowing in Q4
Source: Agencies |
December 21, 2012, Friday
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THE US economy grew at an annual rate of 3.1 percent over the July-September quarter as consumers spent more and state and local governments added to growth for the first time in nearly three years. But the economy is likely slowing in the current quarter.
The Commerce Department's third and final estimate yesterday of growth for the July-September quarter was revised up from its previous forecast of a 2.7 percent annual growth rate.
Growth in the third quarter was more than twice the 1.3 percent expansion rate in the April-June quarter. But disruptions from Superstorm Sandy in the Northeast, and uncertainty over the January 1 "fiscal cliff" of tax increases and deep spending cuts are likely holding back growth in the October-December quarter. Many analysts predict an annual growth of just 1.5 percent for this quarter.
And they aren't expecting much improvement in the January-March quarter. The latest forecast from 48 top economists for the National Association of Business Economics is for first-quarter growth of just 1.8 percent.
Growth at that level is considered too weak to significantly lower the jobless rate, which was 7.7 percent in November.
But if Congress and the White House reach agreement to avoid the fiscal cliff, economic growth could accelerate next year, many economists, including Federal Reserve Chairman Ben Bernanke, have said. The Fed last week said it plans to keep a key interest rate at a record low as long as unemployment remains above 6.5 percent. And it forecast that unemployment would stay that high until late 2015.
The government's final estimate of a 3.1 percent growth rate for gross domestic product last quarter is a sharp improvement over its initial estimate of a 2 percent rate - a figure that it later revised up to 2.7 percent based on a buildup in business stockpiles.
The further upward revision this month reflected stronger consumer spending, which accounts for about 70 percent of economic activity. The government said consumer spending grew at an annual 1.6 percent in the third quarter, above its previous estimate of 1.4 percent.
Commerce also revised up its estimate of spending by state and local governments to show a gain of 0.3 percent - the first quarterly increase in three years. State and local governments had previously been slashing payrolls and other spending in the aftermath of the Great Recession.
The Commerce Department's third and final estimate yesterday of growth for the July-September quarter was revised up from its previous forecast of a 2.7 percent annual growth rate.
Growth in the third quarter was more than twice the 1.3 percent expansion rate in the April-June quarter. But disruptions from Superstorm Sandy in the Northeast, and uncertainty over the January 1 "fiscal cliff" of tax increases and deep spending cuts are likely holding back growth in the October-December quarter. Many analysts predict an annual growth of just 1.5 percent for this quarter.
And they aren't expecting much improvement in the January-March quarter. The latest forecast from 48 top economists for the National Association of Business Economics is for first-quarter growth of just 1.8 percent.
Growth at that level is considered too weak to significantly lower the jobless rate, which was 7.7 percent in November.
But if Congress and the White House reach agreement to avoid the fiscal cliff, economic growth could accelerate next year, many economists, including Federal Reserve Chairman Ben Bernanke, have said. The Fed last week said it plans to keep a key interest rate at a record low as long as unemployment remains above 6.5 percent. And it forecast that unemployment would stay that high until late 2015.
The government's final estimate of a 3.1 percent growth rate for gross domestic product last quarter is a sharp improvement over its initial estimate of a 2 percent rate - a figure that it later revised up to 2.7 percent based on a buildup in business stockpiles.
The further upward revision this month reflected stronger consumer spending, which accounts for about 70 percent of economic activity. The government said consumer spending grew at an annual 1.6 percent in the third quarter, above its previous estimate of 1.4 percent.
Commerce also revised up its estimate of spending by state and local governments to show a gain of 0.3 percent - the first quarterly increase in three years. State and local governments had previously been slashing payrolls and other spending in the aftermath of the Great Recession.
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