WASHINGTON (AP) — The U.S. economy grew at a 3.6 percent
annual rate from July through September, the fastest since early 2012.
But nearly half the growth came from a buildup in business
stockpiles, a trend that could reverse in the current quarter and hold back
The Commerce Department’s second estimate of third-quarter
growth was sharply higher than the initial 2.8 percent rate reported last month.
And it was well above the 2.5 percent growth rate for the April-June quarter.
Almost the entire third-quarter revision was due to a big
jump in stockpiles. Consumer spending, the lifeblood of the economy, was the
weakest in nearly four years.
When excluding inventories, the economy grew at a 1.9
percent rate in the third quarter, down from 2.1 percent in the spring. That’s
in line with the same subpar rate that the economy has seen since the Great
Recession ended four years ago.
“There’s no momentum here,” said Ian Shepherdson, chief
economist at Pantheon Macroeconomics.
He said overall economic growth could come in below 2
percent in the October-December quarter.
Business stockpiles contributed 1.7 percent points to
growth, twice the contribution reported last month in the first estimate.
Companies are likely to cut back on restocking at the end of the year,
especially if they don’t see consumers stepping up spending.
In the third quarter, consumers increased their spending at
a tepid 1.4 percent annual rate. That was the slowest since the final quarter of
2009, a few months after the recession officially ended. Consumer spending
typically drives 70 percent of economic activity.
But the spending activity in the third quarter was held back
by flat spending on services. That may have reflected an unusually mild summer,
which cut demand for air conditioning. One hopeful sign: Consumers spent on
goods at the fastest rate since early 2012.
Other details in the report were mixed. Business investment
in equipment was flat in the third quarter. Spending on housing construction
remained strong, rising at an annual rate of 13 percent.
Government spending edged up at a slight 0.4 percent annual
rate in the summer. The biggest spending increase in state and local government
spending since 2009 offset another decline in federal expenditures.
A number reports have offered some promise that the fourth
quarter could be stronger than many economists are predicting.
In October, spending at retail businesses rose solidly, U.S.
exports grew to a record level and employers added 204,000 jobs. November car
sales rose 9 percent and are running at an annual rate of 16.4 million, the best
performance of the year, according to Autodata Corp.
But early reports on holiday shopping have been
disappointing. The National Retail Federation estimates that sales over the
four-day Thanksgiving Day weekend — arguably the most crucial shopping stretch
for retail businesses — fell for the first time since the group began keeping
track in 2006.
Faster growth could make the Federal Reserve more inclined
to begin slowing its bond purchases, which have kept long-term interest rates
low and encouraged more borrowing and spending.
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