05 December 2013 17:02 [Source: ICIS news]
WASHINGTON (ICIS)--The US economy performed better in the third quarter this year than initially thought, the US Commerce Department said on Thursday, with gross domestic product (GDP) growing by 3.6% rather than the initial estimate of 2.8%.
In normal economic times, annual US economic expansion would be expected to be in the 3% to 3.5% range - referred to by economists as trend growth - that has typified, on average, the nation’s pace of expansion since World War II.
US GDP growth in the first quarter of this year was 1.1% on an annualised basis, but the economy’s expansion picked up some speed in the second quarter, growing by 2.5%.
In its second estimate of third-quarter performance, the department said that the jump in annualised GDP growth was chiefly due to a larger increase in private inventory investment than earlier estimated.
Also contributing to the higher GDP growth rate, said the department, was a deceleration in the volume of foreign goods imported to the US. Imports count as a negative in assessing GDP performance.
Increased spending by state and local governments also helped drive the GDP figure higher for the July-September period.
Those improvements, however, were in part offset by fewer US exports and a slowdown in consumer spending and commercial real estate development.
In particular, the report noted that consumer spending - what the department calls personal consumption expenditures (PCE) - increased by 1.4% in the third quarter from the second quarter.
That was a positive advance, but it was lower than the PCE growth of 1.8% in the second quarter.
Commercial real estate development - non-residential fixed investment - rose by 3.5% in the third quarter, the department said, but that marked a bit of a slowdown from the 4.7% gain seen in this sector in the second quarter.
Although the pace of residential construction eased in the third quarter, the report said, declining to 13% from the 14.2% growth rate in the second quarter, it was nonetheless a strong showing in this crucial economic sector.
The growth of US exports also slowed in the third quarter, dropping to 3.7% from the 8% expansion of exports seen in the second quarter, a decline of 4.3 percentage points.
But the pace of US imports of foreign-made goods also eased in the third quarter, declining by a nearly equal 4.2 percentage points from the second quarter. Third quarter imports rose at 2.7% compared with the second quarter pace of 6.9%.
The first estimate of US fourth quarter GDP performance will be issued by the department on 20 January along with a full-year 2013 economic assessment.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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