Exports, government spending buoy third-quarter growth
December 21, 2012 12:49 AM EST
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 percent annual rate, the Commerce Department said in its third estimate on Thursday, up from the 2.7 percent 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 percent pace. Exports grew at a 1.9 percent rate, rather than 1.1 percent.
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 percent growth rate from 3.5 percent, 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.
About $600 billion in automatic government spending cuts and higher taxes could be pulled out of the economy in early 2013, and tip it back into recession unless an agreement is reached on less punitive plan.
While growth in consumer spending, which accounts for about 70 percent of U.S. economic activity, was raised by 0.2 percentage point to a 1.6 percent 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 percent rate. Final sales of goods and services produced in the United States had been previously estimated to have increased at a 1.9 percent pace.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci)
Most Popular Slideshows
- Taylor Swift Named Forbes' Second Highest Paid Country Musician [PHOTOS]
- Forever Lost: Indescribable Anguish for Malaysia Airlines MH17 Families, Remains of Some Victims May Never Be Found (PHOTOS)
- Global Aviation Accidents: UN to Form Safety Task Force, Gov'ts Should Share Intelligence Info to Avert Future Incidents on Flying Over Warzones (PHOTOS)
- Lunch with the Gods: Pope Francis Eats with Vatican Workers in Cafeteria
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Samsung Galaxy S5 Alpha Leaks Online: Release Date, Five Features to Wait for New Smart Phone
- Photos of Motorola Moto X+1 Prototype and Specs Leak Online, Release Date, Four Fresh Features Revealed
- Sony Xperia Z3: Release Date, Five Features to Expect from New Android Smart Phone
- 5 Food Scandals That Shocked The World
- Iran Leader Asks Muslims to Supply Arms to Palestine, Calls Israel ‘Rapacious Wolf’
- Nexus 6 Likely Confirmed as Motorola 5.9-Inch Phablet on Release Date – Report
- MH17: Shrapnel Hits Plane, Russia Calls for UN-led Investigation