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Friday, October 21, 2016

U.S. Economy Grew 3.5 Percent In Third Quarter

U.S. Economy Grew 3.5 Percent In Third Quarter

Washington (AFP) – The U.S. economy grew at a stronger-than-expected pace in the third quarter, lifted by lower imports and a surge in defense spending, according to government data released Thursday.

The world’s largest economy expanded at an annual rate of 3.5 percent in the July-September period, the Commerce Department said in its first estimate for the quarter.

Economists had expected third-quarter growth would come in slower, with the consensus estimate at 3.0 percent, after the robust 4.6 percent expansion in the second quarter. The economy contracted 2.1 percent in the first quarter largely due to severe winter weather.

The report came a day after the Federal Reserve ended its asset-purchase program, revealing increasing confidence in a modestly expanding economy and citing “substantial improvement” in the labor market.

“Growth above three percent in four of the past five quarters is starting to look like a trend,” said Ian Shepherdson of Pantheon Macroeconomics.

“If growth continues at this pace — we think it will — the first Fed tightening could easily come in the spring, especially if wage gains start to pick up.”

The deceleration in growth from the second quarter principally was due to slower business investment.

The economy’s key driver, consumer spending, also cooled, rising 1.8 percent after increasing 2.5 percent in the prior quarter.

Disposable personal income grew 2.7 percent, down from a 4.4 percent rise in the second quarter.

A shrinking trade deficit added 1.32 percentage point to growth, the best gain since the 2009 second quarter. Exports of goods and services increased 7.8 percent, while imports fell 1.7 percent.

Federal government spending increased a hefty 10.0 percent, led by a 16 percent surge in defense spending.

Inflation slowed in the second quarter to well below the Fed’s 2.0 percent comfort zone. The personal consumption expenditures price index, the central bank’s preferred inflation measure, fell to 1.2 percent from 2.3 percent in the prior quarter.

“Looking through the quarterly volatility, caused to a large extent by inventories and trade, consumer spending will remain the main growth engine of the US economy. It should be well supported by the ongoing improvement in the labor market, and the anticipated pick-up in wages,” said Harm Bandholz of UniCredit Economics.

AFP Photo/Paul J. Richards

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  • Lynda Groom

    Translation: More bad news in the opinion of the right.

    • bobnstuff

      Don’t worry they will say it’s a lie.

      • Dominick Vila

        …until they conclude that they can benefit from the effects of President Obama’s policies, and cynically adopt them as their own as Gov. Rick Scott is doing in Florida. When that happens, all the claims of low paying, part time, jobs are conspicuous by their absence and everything is peachy.

        • bobnstuff

          One thing for sure they will never give the president credit for anything.

          • Dominick Vila

            In addition to that, they attack him when he caves in and tries to meet them half way. The only criticism I can think of when it comes to President Obama’s policies is that he should have learned by now that trying to satisfy loser is futile. He should have reminded them in 2009 and in 2012 that elections have consequences, and that short of providing constructive ideas their ideological leanings and preferences are irrelevant. He, and the DNC at large, allowed the GOP to get away with murder, control the agenda and the airwaves, and we are now paying dearly for it.

          • bobnstuff

            The problem is we got a Wilson when we needed an LBJ.

          • Dominick Vila

            Woodrow Wilson was a conservative – progressive – President who governed with a conservative Democratic Congress. He tried to keep us out of WWI, and when he realized that we had no choice but to intervene, he paid for our participation in that dreadful event, in part, using the newly created Federal Reserve Bank and the famous Liberty Bonds. He sought and got labor union cooperation in many of his endeavors, was responsible for the Federal Reserve Act, the Federal Trade Commission, the Federal Farm Loan Act, and the income tax. His goal was, decidedly, to use the Federal government to support business and job creation.
            President Obama is, in my opinion, a centrist whose policies have helped our business community, influenced job creation, stimulated the economy and resulted in robust consumer confidence and a reduction in Federal government deficits.
            However, I think that comparing President Obama to President Wilson is a bit of an exaggeration.

          • bobnstuff

            They both think things through before taking action, both try not to go to war. I think I like Wilson better but the book isn’t closed on Obama yet.

          • silas1898

            Wilson was also a racist who segregated DC. Bad comparison.

        • Whatmeworry

          The only one using those terms is Barak

  • Whatmeworry

    4 days before the election what would expect. In 2 weeks it will be revised to 1.2%