Amid Global Slowdown, U.S. Growth Keeps Looking Better
While GDP growth for the third quarter was revised upward to 3.9%, wages, among other things, are holding back full-blown economic growth.
The economy expanded at its fastest pace in more than a decade during the spring and summer, showing the U.S. has strengthened its economic footing despite increasing global uncertainty.
Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a seasonally adjusted annual rate of 3.9% in the third quarter, the Commerce Department said Tuesday.
The upward revision from a first estimate of 3.5% put the combined growth rate in the second and third quarters at 4.25%, affirming the best six-month pace since the second half of 2003. The output figures are inflation adjusted ...
The upward revision to overall growth, driven by stronger consumer and business spending and a smaller drag from inventory investment, surprised economists who had expected quarterly GDP would be marked down. ...
The third-quarter growth revision was supported by several factors. Consumer spending, rising at a 2.2% pace, was better than initially estimated as businesses didn’t allow stockpiles to dwindle as much as first thought. Those factors, combined with falling gasoline prices, point to the potential for strong momentum for shoppers heading into the holidays. ...
Business spending on new buildings, machinery and research-and-development efforts grew more than initially estimated, and spending on residential building and improvements advanced for the second straight quarter after slowing late last year. ...
Last quarter, trade added 0.78 percentage point to overall growth, supported by a 4.9% increase in U.S. exports. A global slowdown is likely to depress demand for U.S. goods and services, and could turn net trade into a drag on the economy.
Government outlays contributed to economic growth for the second straight quarter, after mostly serving as a drag in recent years. But the latest increase was due to an unusually large jump in military spending, increasing at a 16% pace, which is likely to be reversed in coming quarters given efforts to constrain military budgets.
Forecasting firm Macroeconomic Advisers projects GDP gains will slow to a 2.2% pace in the fourth quarter, putting full-year growth a shade above 2%.
Those risk factors could weigh on the Federal Reserve’s decision for when to raise short-term interest rates from near zero, despite a much improved labor market. The unemployment rate fell last month to its lowest level since 2008, though some underlying metrics suggest the labor market remains short of its potential.
