WASHINGTON (ICIS)--The US economy expanded in the third quarter at an annual pace of 2.8%, the Commerce Department said on Thursday, marking a slight but definite improvement from the 2.5% growth rate seen in the second quarter this year.
In its first estimate of third-quarter gross domestic product (GDP) growth, the department said that the pace of expansion was accelerated by increased consumer spending, more home building and sales, gains in exports, business investment and spending by state and local governments.
Those improvements were offset somewhat, said the report, by a decline in federal government spending during the quarter and an increase in US imports of foreign goods. Imports are counted as a negative in the calculation of GDP.
The third-quarter GDP improvement suggests that the US recovery is continuing to make slow but sure advances.
The third-quarter performance is especially positive compared with the anaemic first-quarter GDP growth rate of only 1.1%.
When that mediocre first-quarter performance is balanced with improving numbers in the second and third quarters - pulling down the overall average - economists are forecasting that full-year US GDP growth this year will be only 1.9% but then reach normal trend growth of 3% or better in 2014.
While the third quarter did generate more growth for the economy, it also showed a significant boost in prices, according to the department.
The report says that prices paid by US consumers in the third quarter rose by 1.8% compared with the slim 0.2% gain in prices seen in the second quarter.
Excluding prices for the more volatile foods and fuels categories, the price index for gross domestic purchases rose by 1.5% in the third quarter, the report said, a stronger gain than the 0.8% core index advance in the second quarter.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy