US Q3 GDP growth rate revised upward to 2.7%

29 November 2012 17:28  [Source: ICIS news]

WASHINGTON (ICIS)--US GDP growth was stronger in the third quarter than earlier estimated, the Commerce Department said on Thursday, with the annualised GDP pace raised to 2.7% from the earlier 2% appraisal.

At 2.7%, the GDP rate is nearing what most economists regard as normal growth for the US economy of 3% to 3.5% annually.

The better GDP performance in the third quarter follows the second quarter’s 1.3% expansion pace and the first quarter’s 1.9% growth rate.

In its revised second report, the department said that the stronger GDP performance in the three months ended 30 September reflects more accurate data than was available when the first estimate was issued on 26 October.

According to that later data, the bump-up in the third quarter GDP rate could be attributed to a much stronger housing market, a boost in durable goods orders, gains in private inventory investments and increased federal government spending, especially for defence.

For example, home building and housing sales rose by 14.2% in the third quarter, a strong increase from the second quarter’s 8.5% gain in what the department calls residential fixed investment.

In durable goods manufacturing and sales, the department said the third quarter saw an 8.7% gain, in contrast the 0.2% decline seen in the second quarter.

The other major driver of the improved third quarter GDP pace was government spending, especially on the federal level.

The department said that spending on national defence items – warplanes, ships, parts and equipment – rose by nearly 13% in the third quarter compared with the second quarter’s 0.2% decline.

Federal spending on government programmes other than defence rose by 3% in the third quarter from a 0.4% decline in the second quarter.

Consumer spending helped elevate the third-quarter GDP pace, the department said, although at 1.4%, it was about even with the second quarter’s 1.5% expansion.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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