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Business Title: U.S. Economy Grew More-Than-Estimated 2.5% Last Quarter, Revised From 2% Nov. 23 (Bloomberg) -- The U.S. economy grew at a 2.5 percent annual rate in the third quarter, more than previously calculated, as companies increased shipments abroad and Americans boosted their spending. The revised increase in gross domestic product compares with a 2 percent estimate issued last month and a 1.7 percent rise in the second quarter, figures from the Commerce Department showed today in Washington. Corporate profits grew last quarter at a slower pace and an increase in employee wages in the prior three months was almost twice as much as initially reported. While gains in earnings are giving companies the wherewithal to hire, the pace of growth is failing to bring down a jobless rate hovering near 10 percent. Unemployment along with a cooling of inflation as retailers such as Wal-Mart Stores Inc. reduce prices underscore the Federal Reserve’s decision to inject more money into the economy. “This is still, by the standards of history, only a half- speed expansion,” said Avery Shenfeld, chief economist at CIBC World Markets in Toronto, who correctly forecast the revised increase in GDP. Inflation “is very tame and 2.5 percent growth is not fast enough to put Americans back to work by any extent.” Today’s figures showed bigger gains in exports, consumer spending and business investment in new equipment than previously estimated. Economists’ Forecasts Economists surveyed by Bloomberg News projected the growth rate would increase to 2.4 percent, according to the median of 78 forecasts. Estimates ranged from 2 percent to 2.9 percent. Sales of existing homes fell more than forecast in October as foreclosure moratoriums and a lack of credit disrupted the housing market, according to a separate report today from the National Association of Realtors. Purchases decreased 2.2 percent to a 4.43 million annual rate from 4.53 million in September. Economists projected sales would decline to a 4.48 million pace, according to the median forecast in a Bloomberg News survey. The median price fell 0.9 percent from a year earlier. The Standard & Poor’s 500 Index dropped 1.3 percent to 1,182.44 at 10:20 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to prices, fell to 2.74 percent from 2.80 percent late yesterday. Consumer Spending Today’s gross domestic product report showed consumer spending, which accounts for about 70 percent of the economy, increased at a 2.8 percent annual rate in the third quarter, the fastest since the final three months of 2006. The gain compares with a previously reported 2.6 percent rise, and 2.2 percent in the second quarter. The revision reflected an increase in purchases of used automobiles, the Commerce Department said. Stock market gains, increased income and reduced debt may be allowing consumers to boost spending. Employers added 151,000 workers to their payrolls in October, the first rise in five months. Measures of hours worked and wages also increased, according to Labor Department data. Today’s report also showed that in the second quarter, wages and salaries increased by a revised $97.4 billion from the first three months of 2010, compared with $51.1 billion initially reported. The figures incorporate new, more comprehensive data from the Labor Department and may help support the biggest part of the economy in coming months. Corporate Profits Corporate profits rose 2.8 percent in the third quarter after a 3 percent increase the second three months of the year, today’s report showed. Earnings were up 28 percent from the same time last year. Payroll increases may need to accelerate to bring down the unemployment rate, which held at 9.6 percent last month. Economists surveyed by Bloomberg earlier in November forecast the jobless rate will average 9.3 percent in 2011, making for a third year of rates over 9 percent. Growth of 2.5 percent to 3 percent over the next year is “enough to bring the unemployment rate down, not rapidly, but bring it down at least 0.5 percent,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. A faster decline in joblessness would require growth in the 4 percent to 5 percent range, he said. Joblessness is currently “high and, given the slow pace of economic growth, likely to remain so for some time,” Fed Chairman Ben S. Bernanke said in a speech in Frankfurt on Nov. 19. Bernanke defended the additional $600 billion in monetary stimulus the Fed announced earlier this month. Price Gauge The Fed’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, climbed at an unrevised 0.8 percent annual pace in the third quarter, down from a 1 percent increase the prior quarter. The central bank’s longer-term projection is a range of 1.7 percent to 2 percent. Wal-Mart, the world’s largest retailer, said yesterday that it will match the price of competitors’ ads on Black Friday, the day after Thanksgiving. Weekend savings will begin with Thanksgiving Day online specials on Nov. 25 and will run through Saturday, with cut-price deals on electronics, home items and apparel. Bentonville, Arkansas-based Wal-Mart is offering free shipping to homes on almost 60,000 holiday items through its website as it vies for budget-conscious shoppers. The trade deficit in the third quarter was $506.7 billion, compared with an initial estimate of $514.9 billion, subtracting 1.76 percentage points from growth. Exports added 0.77 percentage point to third-quarter growth. Inventory Growth Inventory accumulation contributed 1.3 percentage points to third-quarter growth. The Commerce Department said in its initial report that stockpiles added 1.44 percentage points to growth after 0.82 percentage point in the second quarter. The inventory revision reflected new information on natural gas, coal and petroleum stockpiles for utilities, the Commerce Department said. Retailers forecasting stronger sales during the Christmas holiday shopping period are adding to stockpiles. Macy’s Inc. said it’s adding to inventories in anticipation spending will pick up during the holidays. The second-biggest U.S. department- store chain earlier this month reported third-quarter earnings that exceeded analysts’ estimates. “We have focused on building fresh inventories in opportunity areas to help drive our fourth-quarter sales,” Chief Financial Officer Karen Hoguet said on a conference call. “While higher than it has been, the inventory level is still well below our comp-store sales trend.” Underlying Demand Excluding trade and inventories, a measure of underlying demand, the economy would have grown at a 2.9 percent annual rate after expanding at a 4.3 percent pace the previous three months. The Commerce Department last month estimated a 2.5 percent pace of final sales to domestic purchasers in the third quarter. Business spending on new equipment and software advanced at a 16.8 percent pace last quarter, compared with an initial estimate of 12 percent. Trucking companies have started to replace aging equipment after 11 straight months of year-over-year increases in demand. U.S. trucks now average 6.7 years of age, about 11 months older than the historical average and the oldest in 31 year of data by market forecaster ACT Research Co. Daimler AG, the maker of Freightliner trucks, expects the “vast majority” of 2011 purchases to be replacement vehicles, Mark Lampert, senior vice president of sales and marketing for the company’s North American truck unit, said in an interview.
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#1. To: Brian S (#0)
Blah, the "revision" was due to inventories growth. Take out that and the GDP grows by only 1.6%. The change in real private inventories added 1.30 percentage points to the third-quarter change in real GDP, after adding 0.82 percentage point to the second-quarter change. Private businesses increased inventories $111.5 billion in the third quarter, following increases of $68.8 billion in the second quarter and of $44.1 billion in the first. Another Obama failure for all to see.
Clinton and Cuomo are the true bandits who lit the fuse to this economic crisis we're now in. All in the name of getting more minorities in houses: http://libertysflame.com/cgi-bin/readart.cgi?ArtNum=12554
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