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revision shows u.s. growing at fastest rate since 2011 -

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Solved revision shows u.s. growing at fastest rate since 2011 -

Post by aolaisonr on December 22nd 2013, 8:53 pm

WASHINGTON — The United States economy grew at a surprisingly robust 4.1 percent annual pace in the third quarter, It is the latest evidence that the generally sluggish recovery is gaining strength, though economists noted that the underlying rate of growth remains at a trot, not a gallop – a pace of about 2.wireless security cameras5 percent a year. “We continue to believe that underlying growth will remain on a moderate trend,” said Joshua Shapiro, the chief United States economist at MFR Inc., a consultancy. “The outlook is greatly dependent on the direction of the labor market, and hence the path of wage and salary growth and the ability of consumers to expand spending.” With stronger growth, the job market is improving, but earnings and employment remain far from healthy levels, economists think. The unemployment rate fell to 7 percent in November from 7.8 percent a year earlier. But that improvement is in no small part due to workers leaving the labor force, and many working households are still struggling with stagnant incomes. Still, the Commerce Department data, which raised the estimate of third-quarter growth from an earlier 3.6 percent, shows more evidence of faster and broad-based growth that might lead to a healthier labor market – and more solid growth – in 2014. The refined estimate is based on “more complete source data,” the department said, that showed personal consumption and business investment to be higher than previously thought.outdoor wireless security camera Those figures came in “dramatically better than initially expected after an unusually large series of surprises,” said Morgan Stanley economists in a note to clients, calling the government release a generally “strong report.” Economists had expected the final estimate of growth to be unchanged from the earlier 3.6 percent. But the data showed that consumers have stepped up their spending on health care, houses and cars as the strengthening recovery has led businesses to hire and rising home values have improved household balance sheets. The Commerce Department increased its estimate of consumer spending, which accounts for more than two-thirds of economic activity, to a 2 percent rate from 1.4 percent. The economy’s general strength has The third-quarter growth came from a broad range of other sources: personal consumption, exports, investment in new factories and houses, state and local government spending and a rise in business inventories. Federal spending cuts and rising imports were a drag on growth, the department said. Economists expect growth to slow in the fourth quarter, in part because some of the upswing has resulted from businesses building up their inventories. While Wall Street “has been concerned with the swing in fiscal policy between 2013 and 2014, they should be focused on the swing likely in inventory,” said Steven Ricchiuto, the chief economist at Mizuho Securities USA, in an email. “A lot of this inventory is cars and light trucks.” Even so, economists said that the underlying pace of growth remains strong enough to expect a better 2014 than 2013, given increasing consumer spending and stronger business fundamentals, including high corporate profits. “The third-quarter’s stellar growth rate is not destined to be repeated, but is it a harbinger of a better year for the economy in 2014,” said Doug Handler, the chief United States economist for IHS Global Insight, citing strength in the housing market and in exports. The St. Louis-based forecasting firm Macroeconomic Advisers expects growth to slow to a 2.3 percent pace in the fourth quarter, before picking up again next year. “Receding fiscal drag, the waning effects of the sharp rise in yields since earlier in the year, continued improvement in credit terms and equities and building confidence underlie the move to growth of 3 percent or above over the next few years,” the firm said this week. The easing of cutbacks and uncertainty from Washington should also bolster growth going forward, economists think. This year, the end of the payroll tax holiday and imposition of a trillion dollars in long-term spending cuts, known as sequestration, cut into the economy’s expansion. The looming end of extended unemployment insurance payments for the long-term jobless and cuts to the food stamps program will weigh on consumer spending and the recovery more generally next year, but the scale of the drag should be much smaller. The stronger growth in the third-quarter came in spite of strong headwinds from Washington, including brinkmanship over the debt limit this fall that sent jitters through financial markets; the imposition of sudden across-the-board spending cuts known as sequestration in the spring; and a 16-day government shutdown in October. “The economy is finishing 2013 in a stronger place than where it began the year,” said Jason Furman, the chairman of the White House’s Council of Economic Advisers, The latest revision showed business stockpiles grew to $115.7 billion, down from the earlier estimate of $116.5 billion. The growth rate was 2.5 percent for the second quarter.<br>

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