US GDP growth: US GDP Growth Third Quarter
Published: November 25, 2015
US GDP growth: US GDP Growth Third Quarter, The American economy turned in a better performance last quarter than first thought, expanding at a 2.1 percent rate, the government said on Tuesday.
Nearly all of the improvement was because of revised data on inventories, which showed businesses restocking shelves at a faster pace than the government first estimated. The improvement in inventory levels was offset by a slight downward revision in consumer spending last quarter.
Although well below the 3.9 percent pace of growth recorded in the spring, the economy’s advance was better than the initial 1.5 percent rate for the third quarter that the Commerce Department reported late last month.
Wall Street economists had been expecting the upward revision for gross domestic product, which is the second of three estimates for growth that the government will release. The final set of numbers will come out on Dec. 22.
The tepid pace prompted Jan Hatzius, chief economist at Goldman Sachs, to call this the “tortoise recovery” in a recent note to clients. But that sobriquet does not mean the economy has been uniformly lackluster.
“While this expansion may go uncelebrated, growth in fact has been good enough to achieve a great deal of cumulative progress in the labor market,” he added. “We now expect that the U.S. economy will reach full employment within the next 12 months – the ‘tortoise recovery’ looks to be approaching the finishing line.”
As for the third quarter, the more refined inventory numbers provided a lift to growth, but they are likely to slow down reported economic activity in the current fourth quarter as manufacturers and retailers cut back on restocking of warehouses and backroom stores.
“The inventory revision was even bigger than we expected,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.
One mildly downbeat note on Tuesday was an unexpected drop in consumer sentiment this month, with the Conference Board reporting that its index for consumer confidence fell to 90.4 from 99.1 in October. Despite a strong advance in hiring last month, consumers expressed more caution about the job market and future economic conditions in the most recent survey.
Consumer attitudes in the United States should rebound. “U.S. consumers are cash-rich and increasingly secure in their jobs,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Confidence won’t remain at the soft November level.”
Nothing in the latest data is expected to derail plans by Federal Reserve policy makers to raise their benchmark interest rate at their meeting next month. The Fed’s key lever for influencing the economy has been stuck at close to zero since December 2008.
With the unemployment rate falling to 5 percent in October and employers bolstering payrolls by 271,000, Fed officials are likely to conclude when they meet next month that the economy is strong enough to handle the first increase in interest rates in nearly a decade.
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