clear
Wednesday July 29th, 2015 10:09PM

US economy grows at 3.6 percent rate in 3rd qtr.

By The Associated Press
WASHINGTON (AP) -- The U.S. economy grew at a 3.6 percent annual rate from July through September, the fastest since early 2012. But nearly half the growth came from a buildup in business stockpiles, a trend that could reverse in the current quarter and hold back growth.

The Commerce Department's second estimate of third-quarter growth released Thursday was sharply higher than the initial 2.8 percent rate reported last month. And it was well above the 2.5 percent growth rate for the April-June quarter.

Almost the entire third-quarter revision was due to a big jump in stockpiles. Consumer spending, the lifeblood of the economy, was the weakest in nearly four years.

When excluding inventories, the economy grew at a 1.9 percent rate in the third quarter, down from 2.1 percent in the spring. That's in line with the same subpar rate that the economy has seen since the Great Recession ended four years ago.

"There's no momentum here," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He said overall economic growth could come in below 2 percent in the current October-December quarter.

Paul Ashworth, chief U.S. economist at Capital Economics, agreed that inventories will hold back growth in the current quarter. But he disagreed that the report suggested the economy was not strengthening. He noted that business sales increased markedly, corporate profits rose, income grew and Americans saved more. The report adds "to the evidence that the recovery is gaining momentum."

Business stockpiles contributed 1.7 percent points to growth, twice the contribution reported last month in the first estimate. Companies are likely to cut back on restocking at the end of the year, especially if they don't see consumers stepping up spending.

In the third-quarter, consumers increased their spending at a tepid 1.4 percent annual rate. That was the slowest since the final quarter of 2009, a few months after the recession officially ended. Consumer spending typically drives 70 percent of economic activity.

But the spending activity in the third quarter was held back by flat spending on services. That may have reflected an unusually mild summer, which cut demand for air conditioning. One hopeful sign: Consumer spent on goods at the fastest rate since early 2012.

Other details in the report were mixed. Business investment in equipment was flat in the third quarter. Spending on housing construction remained strong, rising at an annual rate of 13 percent. Government spending edged up at a slight 0.4 percent annual rate in the summer. The biggest spending increase in state and local government spending since 2009 offset another decline in federal expenditures.

A number reports have offered some promise that the fourth quarter could be stronger than many economists are predicting.

In October, spending at retail businesses rose solidly, U.S. exports grew to a record level and employers added 204,000 jobs. November car sales rose 9 percent and are running at an annual rate of 16.4 million, the best performance of the year, according to Autodata Corp.

But early reports on holiday shopping have been disappointing. The National Retail Federation estimates that sales over the four-day Thanksgiving Day weekend - arguably the most crucial shopping stretch for retail businesses - fell for the first time since the group began keeping track in 2006.

Faster growth could make the Federal Reserve more inclined to begin slowing its bond purchases, which have kept long-term interest rates low and encouraged more borrowing and spending.

Many economists believe the central bank will not reduce the $85 billion-a-month pace when it meets later this month.
© Copyright 2015 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
S&P 500 index has its best year since 1997
The stock market closed out a record year with more all-time highs on Tuesday, giving U.S. indexes their biggest annual gains in almost two decades.
6:56PM ( 1 year ago )
Colorado readies for 'Green Wednesday' pot sales
Police were adding extra patrols around pot shops in eight Colorado towns that plan to allow recreational sales to anyone over 21 on Jan. 1.
1:52PM ( 1 year ago )
Kerry seeks framework for Mideast peace talks
A senior State Department official says Secretary of State John Kerry will try this week to get Israel and the Palestinians to agree on a framework for negotiating a final peace agreement, yet cautions against raising expectations for Kerry's latest round of shuttle diplomacy.
1:35PM ( 1 year ago )
U.S. News
Missing Ga. bank director arrested in Brunswick
A bank director accused of losing millions of investors' dollars before vanishing last year was arrested Tuesday during a traffic stop in a city in south Georgia.
7:00PM ( 1 year ago )
Amtrak to suspend some Crescent service in Jan., Feb.
Amtrak service will shut down in parts of the Southeast for several days in January and February for rail maintenance by Norfolk Southern Railway.
9:00AM ( 1 year ago )
Lung cancer scans urged for some smokers, not all
Certain current or former heavy smokers should start getting yearly scans for lung cancer to cut their risk of death from the nation's top cancer killer, government advisers said Monday - even as they stressed that the tests aren't for everyone.
7:26AM ( 1 year ago )
Business News
Sex offender held in Hall County for failing to register
A 47-year-old man was booked into the Hall County Jail Tuesday, being held without bond for allegedly failing to register as a sex offender, his second such arrest.
6:09PM ( 1 year ago )
Pharmacy robberies may involve same suspect
Oakwood Police Tuesday afternoon released details in a pharmacy robbery they're investigating, similar to one that happened in the Hall County Tuesday morning.
5:46PM ( 1 year ago )
Victim critical following apartment fire
A 41-year-old woman was in critical but stable condition Tuesday after being rescued from an apartment fire in Forsyth County late Monday afternoon.
3:16PM ( 1 year ago )
Local/State News
Feeling US snub, Saudis strengthen ties elsewhere
Increasingly vocal in its frustration over U.S. policies in the Mideast, Saudi Arabia is strengthening ties elsewhere, seeking out an alignment that will bolster its position after it was pushed to the sidelines this year.
4:34PM ( 1 year ago )
NSA reportedly intercepts computer deliveries
A German magazine has lifted the lid on the operations of the National Security Agency's hacker unit, revealing how American spies intercepted computer deliveries, exploited hardware vulnerabilities, and even hijacked Microsoft's bug report system to spy on their targets.
12:31PM ( 1 year ago )
Rockets fired from Lebanon into Israel
Rockets from Lebanon struck northern Israel on Sunday, causing no injuries but sparking an Israeli reprisal shelling in a rare flare-up between the two countries.
12:26PM ( 1 year ago )
Politics
Planned Parenthood seeks fed study of fetal tissue research
WASHINGTON (AP) — Under fire for its role in providing fetal tissue for research, Planned Parenthood asked the government's top health scientists Wednesday to convene a panel of independent experts to...
8:57PM ( 1 hour ago )
Average US vehicle age hits record 11.5 years
DETROIT (AP) — In the age of Apple's CarPlay, a lot of cars on the road still have tape decks.The average vehicle in the U.S. is now a record 11.5 years old, according to consulting firm IHS Automotiv...
7:01PM ( 3 hours ago )
Los Angeles leaders outlaw high-capacity gun magazines
LOS ANGELES (AP) — The nation's second-largest city is poised to ban possession of firearm magazines that hold more than 10 rounds of ammunition, stepping into the national debate over gun regulation...
6:13PM ( 3 hours ago )
House votes to provide money for highways, transit
WASHINGTON (AP) — The House voted overwhelmingly on Wednesday to shore up federal highway aid and veterans' health care before heading out of town for its August recess, leaving unresolved an array of...
5:51PM ( 4 hours ago )
Stocks end higher after Fed keeps interest rates unchanged
NEW YORK (AP) — U.S. stocks rose on Wednesday after Federal Reserve policymakers voted to keep interest rates unchanged and gave no indication that a rate rise was imminent. A modest rebound in Chines...
5:10PM ( 4 hours ago )