The US economy picked up speed in the third quarter of the year to expand at a 3.7 percent annual rate, the government reported on Friday.
The growth in the US' output of goods and services handily exceeded the 3.3 percent rate registered in the second quarter -- when the economy was held back by a surge in energy prices that took a bite out of US household budgets and dented consumer spending.
Yet despite the third quarter's bounce, economists remained concerned that challenges from high oil prices and lackluster wage and job growth, too-weak exports and the end of corporate tax breaks could inhibit economic expansion in coming quarters.
"It's pretty good news on the economy," said Dick Rippe, chief economist of Prudential Equity Group. "But the uncertainty that hangs over the whole thing is oil. What oil prices do going forward is critical."
Coming out just days before the election, the report was seized on by supporters of both presidential candidates as providing support for their campaign positions.
The data released by the Commerce Department underscored the importance of consumers in keeping the economy moving.
Business investment remained robust in the quarter. Yet the accumulation of inventories slowed -- a sign of business concern over future demand. Trade also exerted a drag on growth as exports grew substantially less than imports.
Nearly nine-tenths of the economic growth recorded during the third quarter was accounted for by personal consumption expenditures. Purchases of durable goods sped ahead by 16.8 percent, the fastest pace in over a year. Car sales alone accounted for more than a quarter of economic growth during the period.
"The American consumer is the spender of last resort for the world economy," said Richard Hoey, chief economist and chief investment strategist of the Dreyfus Corp. "This has the side effect of a high trade deficit and a low savings rate."
Indeed, consumers also revealed a vulnerability that could hinder growth in coming months -- because even as their spending accelerated, their income growth slowed, leading to a fall in the personal savings rate to 0.4 percent of disposable personal income, its lowest ever.
The weak income picture was underscored by new figures from the Labor Department that showed wages of regular workers in the third quarter grew by merely 2.4 percent over the year before, the lowest rate on record, below the inflation rate of 2.7 percent during the period.
The third quarter economic growth was the last item of substantial economic news before the election Tuesday, and both sides on the political divide jumped on the release.
"GDP continues to grow above the average of the 1970s, '80s and '90s while the unemployment rate remains below the average for those decades," Treasury Secretary John Snow said in a news release.
Yet the campaign of Senator John Kerry pointed out that business investment declined by 0.5 percent during President George W. Bush's administration -- the first time this has happened since the 1930s, while exports of goods also declined.
"Most middle-class families will find it difficult to swallow the Bush administration's spin that this is the best economy of our lifetime," said a statement by Gene Sperling, an economic adviser to Kerry.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
AI BOOST: Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, Hon Hai chairman Young Liu said Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers. Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said. On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter. Gross margin improved to 6.35 percent,
RSS