Thu, Nov 27, 2003 page12

• US GDP grows at a brisk 8.2%

  ROBUST SPENDING The US Department of Commerce has revised its estimate of third quarter growth, saying that the economy grew at the fastest rate in 19-and-a-half years

  • REUTERS
  • • 
    • 
    • 

  Robust business and consumer spending powered the US economy ahead in the third quarter at an even brisker clip than first thought, the government said on Tuesday in a report also showing the biggest jump in corporate profits in more than a decade.

  GDP, shot up at an 8.2 percent annual rate, more than double the second quarter's 3.3 percent gain and the strongest quarterly advance in 19-and-a-half years.

  A month ago, the Commerce Department estimated that GDP had grown at a 7.2 percent rate in the third quarter.

  Reinforcing an impression that a stronger-paced recovery was gaining traction, a separate private-sector report found consumer confidence hit a year-high peak in November, buoyed by hopes of improved hiring prospects.

  The New York-based Conference Board said its index of consumer confidence climbed to 91.7, its highest level since Sept. last year, from a revised 81.7 in October. Wall Street analysts had forecast a rise to 85.0.

  "The GDP numbers today are encouraging and they are obviously very positive," White House spokeswoman Claire Buchan said in Las Vegas, where President George W. Bush was taking part in some fund-raising events. But Buchan played down the thought that such a sizzling pace of expansion will continue.

  "I don't think anyone necessarily anticipates that that number will be a number that you'll see in the coming months," she said.

  One sour note came from the housing sector -- one of the economy's mainstays in the crawl back from recession in 2001 -- where sales of existing homes dropped sharply by 4.9 percent to 6.35 million in October.

  Sales for the full year are on track to set a record, analysts say, but a recovering economy eventually will mean higher interest rates that can be a damper on home sales.

  The GDP report pointed to a long-awaited revival in corporate investment, with nonresidential business spending surging at a 14 percent annual rate, double the second quarter's 7.3 percent and ahead of the initially reported third-quarter rise of 11.1 percent.

  "This is a red hot economy," said economist Patrick Fearon of AG Edwards and Sons Inc. in St. Louis, Missouri. "It looks like a lot of the revision came in investments, which is a positive sign because that had been an area of real weakness for a while."

  The department revised its estimate of inventory cuts, saying stocks of unsold goods fell by US$14.1 billion in the quarter instead of the US$35.8 billion it originally reported.

  Consumer spending, bolstered by tax cuts, grew at a revised 6.4 percent annual pace in the third quarter, below the 6.6 percent pace estimated a month ago but well ahead of the second quarter's 3.8 percent.

  Economist Ken Mayland of ClearView Economics LLC in Pepper Pike, Ohio, said the report showed a better balance in growth that was promising for continued healthy expansion.

  "The next phase of economic recovery has to be reinforced by capital spending ... here we have some very strong evidence that businesses loosened up on the purse strings: a real sign of confidence in the economy," Mayland said.
• Most Popular

  • 1

    Napoli’s title hopes shaken by late Genoa equalizer

  • 2

    Privately owned city in Kenya taking on corrupt officials

  • 3

    MOE to encourage foreigners to work in Taiwan

  • 4

    Kane tastes first title as Bayern bid farewell to Mueller

  • 5

    Taiwan celebrates V-E Day for first time