Economy in U.S. Expands at 2% Annual Rate, More Than Forecast
By Shobhana Chandra - Oct 26, 2012 8:30 AM ET.
The economy in the U.S. expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.
A housing rebound is helping mend Americans’ finances and confidence, indicating the pickup in demand for expensive items such as automobiles can be sustained. The data is likely to play a role in the upcoming election, allowing President Barack Obama to say the economy is heading in the right direction, while challenger Mitt Romney may argue growth is not fast enough.
“The economy is expanding, but expanding slowly,” Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We have moderate growth in consumer spending, and one of the previously disastrous areas, housing, is picking up.”
The rate of growth would have been stronger if not for the drought that affected crops in the Midwest. A drop in farm inventories subtracted 0.4 percentage point from third-quarter GDP after cutting 0.2 point in the prior period, the report showed.
Economists’ estimates for GDP ranged from 0.9 percent to 3.1 percent. The GDP estimate is the first of three for the quarter, with the other releases scheduled for November and December when more information becomes available.
Consumer Spending
Consumer purchases, the biggest part of the economy, grew at a 2 percent annual rate, up from a 1.5 percent second-quarter gain and compared with a 2.1 percent median forecast in the Bloomberg survey. Purchases added 1.4 percentage point to growth.
Retail sales in September and August had the best back-to- back showing since late 2010 as shoppers snapped up goods from cars to Apple Inc.’s iPhones. Target Corp. (TGT), the second-biggest U.S. discounter, was among chains topping analysts’ estimates for same-store sales last month.
Cars and light trucks sold at a 14.9 million annual pace in September, the strongest since March 2008, according to Ward’s Automotive Group. Chrysler Group LLC and General Motors Co. (GM) reported gains. Record-low mortgage rates are stoking demand for housing, another area of the economy that’s improving. Firming home prices and a drop in joblessness may further boost Americans’ confidence and spending.
more:
http://www.bloomberg.com/news/2012-10-26/economy-in-u-s-expands-at-2-annual-rate-more-than-forecast.html
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