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Weak Q3 but US may rebound in Q4
Source: Agencies |
November 23, 2011, Wednesday
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Print Edition
Print Edition
THE United States economy grew more slowly than previously estimated in the third quarter, but weak inventory accumulation amid sturdy consumer spending supported views output would pick up in the current quarter.
The gross domestic product grew at a 2.0 percent annual rate in July-September, the Commerce Department said in its second estimate yesterday, down from the previously reported 2.5 percent.
While the revision was below economists' expectations for a 2.5 percent growth pace, the composition of the GDP, especially still-firm consumer spending and the first drop in businesses inventories since the fourth quarter of 2009 signaled a stronger economic performance this quarter.
"The mix or composition of growth improved. Inventory investment was lower so firms are more likely to produce more goods going forward. And exports rose," said Cary Leahey, a senior economist at Decision Economics in New York.
"So while you lost a half percentage point in the revision to third-quarter growth, you might easily get it back in the fourth quarter of this year or the first quarter of next."
Data so far suggest the fourth-quarter growth could exceed 3 percent, the fastest in 18 months.
But the outlook for next year has been clouded somewhat by the so-called super committee's failure to agree on a package of at least US$1.2 trillion in deficit cut over 10 years.
Monday's congressional failure has raised the risk a payroll tax holiday and emergency unemployment benefits will not be extended when they expire next month. That fiscal drag, together with the festering European debt crisis, could undermine consumer spending early next year.
Despite the downward revision, last quarter's growth is still a step-up from the April-June period's 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year.
A jump in gasoline prices had dented consumer spending earlier in the year, and supply disruptions from Japan's earthquake and tsunami in March had curbed auto output.
The gross domestic product grew at a 2.0 percent annual rate in July-September, the Commerce Department said in its second estimate yesterday, down from the previously reported 2.5 percent.
While the revision was below economists' expectations for a 2.5 percent growth pace, the composition of the GDP, especially still-firm consumer spending and the first drop in businesses inventories since the fourth quarter of 2009 signaled a stronger economic performance this quarter.
"The mix or composition of growth improved. Inventory investment was lower so firms are more likely to produce more goods going forward. And exports rose," said Cary Leahey, a senior economist at Decision Economics in New York.
"So while you lost a half percentage point in the revision to third-quarter growth, you might easily get it back in the fourth quarter of this year or the first quarter of next."
Data so far suggest the fourth-quarter growth could exceed 3 percent, the fastest in 18 months.
But the outlook for next year has been clouded somewhat by the so-called super committee's failure to agree on a package of at least US$1.2 trillion in deficit cut over 10 years.
Monday's congressional failure has raised the risk a payroll tax holiday and emergency unemployment benefits will not be extended when they expire next month. That fiscal drag, together with the festering European debt crisis, could undermine consumer spending early next year.
Despite the downward revision, last quarter's growth is still a step-up from the April-June period's 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year.
A jump in gasoline prices had dented consumer spending earlier in the year, and supply disruptions from Japan's earthquake and tsunami in March had curbed auto output.
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