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U.S. GDP Grows at 8.2 Percent Pace in 3Q
(edited for brevity.)The economy roared ahead at an astounding 8.2 percent annual rate in the third quarter, the fastest pace in nearly two decades and a much stronger performance than previously thought. The revised GDP, released by the Commerce Department Tuesday, was a full percentage point higher than the 7.2 percent growth rate estimated a month ago. The new estimate, based on more complete data, reflected stronger investment by business on new equipment and software, less severe cuts in companiesâ inventories and more brisk spending on residential projects. Those were the main factors behind the upward revision to third-quarter GDP, which is considered the broadest barometer of the countryâs economic health. "I think thereâs a better mix of growth in this report, with capital spending being a major portion of the upward revision," said economist Ken Mayland, president of ClearView Economics. "The economy is regaining the confidence of businesses and they are stepping up to the plate and spending and investing for the future." In other economic news, consumer confidence climbed in November to its highest level in more than a year, the Conference Board reported. The private research groupâs consumer confidence index rose to 91.7 in November, up from a revised 81.7 in October. Sales of previously owned homes, meanwhile, fell by 4.9 percent in October to a seasonally adjusted annual rate of 6.35 million, the National Association of Realtors said. Even with the decline, Octoberâs sales marked the third best month on record. In the GDP report, the 8.2 percent growth rate â more than double the 3.3 percent pace registered in the second quarter â represented the best showing since the first quarter of 1984, when the economy surged at a 9 percent pace. Economists were predicting third-quarter GDP would be revised up, with estimates ranging from a 7.3 percent pace to an 8 percent pace. Near rock-bottom short-term interest rates and President Bushâs third round of tax cuts motivated businesses and consumers to spend and invest more, helping the economy to move at such a fast clip in the third quarter, economists say. The next challenge is making sure the rebound is lasting. The Bush administration believes the economy is poised for solid growth and stronger job creation in the months ahead. That is politically important to Bush as he heads into the 2004 campaign. Democrats, however, blame Bush for the loss of 2.3 million jobs since he took office in January 2001 and argue that the tax cuts contributed to the record 2003 budget deficit. For out-of-work Americans, though, it probably doesnât feel like much of an economic recovery. Only recently has the battered labor market shown signs of improving. In October, the unemployment rate improved fractionally, to 6 percent, as the economy added jobs for the third straight month. 6% unemployment; most economists would tell you that means actually closer to 1% real unemployment as there are usually always 5% of all able bodied Americans who donât work.Steady improvements in job creation and in capital investment are crucial ingredients for the economic recovery to be self sustaining, economists say. Analysts believe the economy will grow at a slower, but still healthy rate of at least 4 percent in the current October-to-December period as some of the stimulus provided by the tax cuts and a surge in mortgage refinancing fade. In the GDP report, consumers continued to do their part to keeping the economy going. They boosted spending in the third quarter at a 6.4 percent rate. That was up from a 3.8 pace in the second quarter, but down slightly from the 6.6 percent rate previously estimated for the third quarter. Especially encouraging was a 18.4 percent growth rate in business investment in new equipment and software in the third quarter. That was even stronger than the 15.4 percent pace previously estimated for the quarter and up from a 8.3 percent pace in the second quarter. Spending on residential projects grew at a whopping 22.7 percent pace in the third quarter, also better than the sizable 20.4 percent growth rate first estimated and up from a 6.6 percent pace in the second quarter. Why is this relevant to the WoT? A strong economy is always an important component in the minds of most Americans when they vote. Itâs amazing to me that in two years since 9/11 weâve bounced back so fast. Letâs pray this trend continues. Posted by: Jarhead 2003-11-25 |
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