US economic growth accelerated in the third quarter as a last minute spurt in consumer spending and a surprise turnaround in government outlays offset the first cutback in business investment in more than a year.
Gross domestic product grew at a 2 percent annual rate, the US Commerce Department said on Friday in its first estimate of the third quarter, a pick-up from the second quarter’s 1.3 percent pace. However, to make substantial headway cutting the jobless rate, the economy needs to grow by more than a 2.5 percent pace over several quarters.
The growth was a bit better than economists had expected, in part because of a surge in government defense spending, which was not expected to last. Defense spending rose at its fastest pace in three years, and combined with the rise in household consumption and a jump in home building to strengthen domestic demand.
“The economy still has only weak forward momentum,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. “Some underlying fundamentals are improving, but uncertainty at home and abroad is holding back the business sector.”
Since climbing out of recession, the US economy has faced a series of headwinds ranging from high gasoline prices to the debt turmoil in Europe and, lately, fears of US government austerity.
White House adviser Alan Krueger said the GDP report underscored the need to extend tax cuts for the middle class and small businesses, as US President Barack Obama has proposed. Obama’s Republican challenger, Mitt Romney, described it as evidence of the president’s failed policies.
In the third quarter, consumers shrugged off the impending sharp cuts in government spending and higher taxes that are due early next year and went on a shopping spree, buying automobiles and snapping up Apple Inc’s iPhone 5.
Consumer spending, which accounts for about 70 percent of US economic activity, grew at a 2 percent rate after increasing 1.5 percent in the second quarter.
A separate private-sector report showed consumer sentiment rose this month to its highest point in five years, another sign that households are little worried by the fiscal cliff at year-end that will raise income taxes.
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Merck Group Taiwan yesterday said that it plans to invest substantially on expanding its fab in Kaohsiung’s Lujhu District (路竹) to better serve its local customers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The company said it plans to expand its production space by 50 percent in the next five years and its workforce by about 40 percent, Merck Group Taiwan managing director Dick Hsieh (謝志宏) told a media briefing in Taipei. Hsieh declined to disclose investment details, but said that the latest investment would exceed the total amount Merck has invested in Taiwan over the past few years. Those investments would be