Economy grew faster than expected in summer
Washington, December 20, 2012
The U.S. economy grew faster than previously estimated in the third quarter as
exports and government spending provided a lift, but that boost is likely to be
lost amid slowing global demand and a move towards tighter fiscal policy.
Gross domestic product expanded at a 3.1% annual rate, the
Commerce Department said in its third estimate, revised up from the 2.7% pace
reported last month.
It was the fastest growth since late 2011 and also reflected a slightly better
pace of consumer spending than previously estimated.
Economists polled by Reuters had expected GDP growth would be raised to a 2.8%
pace. Exports grew at a 1.9% rate, rather than 1.1%.
With imports falling for the first time since the second quarter of 2009, that
narrowed the trade deficit. Trade contributed 0.38 percentage point to GDP
growth. The drop in imports is a sign of weak domestic demand.
Government spending was revised to a 3.9% growth rate, from 3.5%, boosted by a
rebound in state and local government outlays. It added three quarters of a
percentage point to GDP growth in the third quarter.
The boost from exports is likely to be short-lived against the backdrop of a
cooling global economy. Government will likely be a drag in the coming quarters
amid belt tightening to trim the budget deficits.
While growth in consumer spending, which accounts for about 70% of U.S.
economic activity, was raised by 0.2 percentage point to a 1.6% rate, that
mostly reflected higher health care costs.
Business inventories were trimmed to $60.3 billion from $61.3 billion.
Restocking by businesses contributed 0.73 percentage point to GDP growth.
Given the sluggish spending pace, some of the inventory accumulation might have
been unplanned, suggesting businesses will need to liquidate stocks this
quarter because of weak demand.
Excluding inventories, GDP rose at a revised 2.4% rate. Final sales of
goods and services produced in the United States had been previously estimated
to have increased at a 1.9% pace.