U.S. economy grew at 3.1 percent in summer
BY MARTIN CRUTSINGER Associated Press
Friday, December 21, 2012
12/21/12 at 5:05 AM
WASHINGTON - The U.S. economy grew at an annual rate of 3.1 percent over the summer as exports increased, consumers spent more and state and local governments added to growth for the first time in three years. But the economy is likely slowing in the current quarter.
The Commerce Department's third and final estimate Thursday of growth for the July-September quarter was revised up from its previous estimate of a 2.7 percent annual growth rate.
Growth in the third quarter was more than twice the 1.3 percent growth rate in the April-June quarter. But disruptions from superstorm Sandy and uncertainty weighing on consumers and businesses from the "fiscal cliff" are likely holding back growth in the October-December quarter. Many analysts predict an annual growth rate of just 1.5 percent for this quarter.
Robert Kavcic, an economist at BMO Capital Markets, said the upward revision to third-quarter growth didn't change his view that the economy is slowing in the current quarter to an annual growth rate below 2 percent. Kavcic said a temporary jump in defense spending and business stockpiling in the July-September period is likely being reversed this quarter.
And many economists aren't expecting much improvement in the January-March quarter. The latest forecast from 48 economists for the National Association of Business Economics is for an annual growth rate of just 1.8 percent in the first quarter of 2013. Growth at that level is considered too weak to significantly lower the unemployment rate, which was 7.7 percent in November.
But if Congress and the White House reach an agreement to avoid the fiscal cliff, 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.
GDP measures the nation's total output of goods and services - from restaurant meals and haircuts to airplanes and appliances.
The further upward revision this month reflected stronger consumer spending, which accounts for about 70 percent of economic activity.
Exports grew at a faster pace than previously estimated.
Original Print Headline: U.S. economy grew 3.1 percent in summer
Slow growth predicted
WASHINGTON (AP) - A measure of the U.S. economy designed to signal future activity fell in November, suggesting that growth could remain weak in the early part of next year.
The Conference Board said Thursday that its index of leading indicators dropped 0.2 percent in November, compared with October, when the index had risen 0.3 percent. It was the first decline in the index since a 0.4 percent fall in August. The index is intended to anticipate economic conditions three to six months out.
Conference Board economist Ken Goldstein says the slight decline in the index November reflects an economy that remains weak as it faces a looming fiscal cliff.
The fiscal cliff refers to sharp increases in taxes and cuts in federal spending that could occur in January if no budget deal is reached.
The November decline marked the fourth time the index has fallen this year. The major components of the index that contributed to the weakness were a rise in applications for unemployment benefits, a fall in stock prices and drop in new orders for manufactured goods.