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Title: U.S. Economy Grew at 2.7% Rate, More Than First Estimated
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2012- ... more-than-first-estimated.html
Published: Nov 29, 2012
Author: Shobhana Chandra
Post Date: 2012-11-29 10:29:15 by Brian S
Keywords: None
Views: 4179
Comments: 5
The economy in the U.S. expanded more than previously estimated in the third quarter as a narrower trade deficit and gains in inventory overshadowed a smaller gain in consumer spending. Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 2.8 percent gain. Household purchases climbed at a 1.4 percent rate, the least in more than a year and down from a previously reported 2 percent rate, and income gains were also cut. “We’re just muddling through,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “The mix between final demand and inventories was far less favorable. The consumer spending numbers are a reflection of the fact that job growth remains sluggish.” The report helps explain why Federal Reserve policy makers have said they’ll continue to pump money into the economy to spur growth and reduce joblessness. At the same time, an improvement in housing, employment gains and healthier household finances may help underpin consumer purchases, the biggest part of the economy. Economists’ estimates for GDP, the value of all goods and services produced, ranged from 2 percent to 3 percent. The economy grew 1.3 percent in the second quarter. Jobless Claims Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed, a report from the Labor Department also showed today. Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey. Stock-index futures held earlier gains after the reports on optimism lawmakers will reach an agreement in budget talks. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.4 percent to 1,413.2 at 8:55 a.m. in New York. The slowdown in consumer spending last quarter reflected fewer purchases of auto fuel and services such as utilities, insurance and financial transactions, the Commerce Department report showed. Household purchases rose at a 1.5 percent rate in the previous three months. The third-quarter gain in consumer purchases was the smallest since the second quarter of 2011 and fell short of the 1.9 percent median forecast in the Bloomberg survey. Wage Revisions The revisions also showed why households may be cutting back. After-tax income adjusted for inflation rose at a 0.5 percent annual rate, compared with a previously estimated 0.8 percent pace as wages and salaries in the third quarter rose by $30.4 billion, less than the initially reported $43.3 billion. Wage gains in the prior period were cut as well, with the new data showing a $23.3 billion second-quarter gain that was about half than the previous estimate of $55.2 billion. Improving sentiment may help put a floor under spending. Consumer confidence climbed to a four-year high in November, a report from the Conference Board showed this week. Household finances and outlooks are benefiting from improving real-estate prices as record-low mortgage rates drive a recovery in housing. The holiday shopping season got under way last week as Thanksgiving Day openings and midnight deals at chains from Target Corp. (TGT) to Wal-Mart Stores Inc. (WMT) drew customers. Spending in stores and online rose 13 percent to $59.1 billion in the four days starting Nov. 22, the National Retail Federation reported. A year ago, sales advanced 16 percent over the holiday weekend. Fed’s View The economy expanded at a “measured pace” in recent weeks as gains in consumer demand and housing were tempered by a slowdown in manufacturing and the impact of Sandy, the Federal Reserve said in its Beige Book business survey released yesterday. Policy makers are continuing with monthly purchases of $40 billion in housing debt to boost the three-year economic expansion. Today’s Commerce Department report also offered a first look at corporate profits. Earnings climbed 3.5 percent in the third quarter from the previous three months, and rose 8.7 percent from the same period last year. Trade and inventories were the bright spots in the report. The trade deficit shrank to $403 billion, less than the $413.7 billion previously estimated and down from $407.4 billion in the prior quarter. Inventory Boost Inventories provided a boost to GDP growth rather than being a drag as first estimated. Stockpiles contributed 0.77 percentage points to growth, compared with a prior estimate that showed they subtracted 0.12 percentage point. At the same time, larger inventories mean businesses may limit production in the fourth quarter unless demand accelerates. The economy faces more hurdles this quarter and next. Sandy, the largest Atlantic storm ever to hit the U.S. may trim as much as 0.5 percentage point from fourth-quarter GDP, according to Jan Hatzius, chief economist at Goldman Sachs Group Inc. in New York. Reconstruction work could add as much as 0.75- point point to GDP in the first quarter of 2013, he estimates. The job market, albeit improving, will reflect a setback from Sandy for some months. Payrolls rose by 100,000 workers in November after climbing 171,000 the prior month, according to the Bloomberg survey median ahead of Labor Department data due Dec. 7. The unemployment rate probably held at 7.9 percent. Fiscal Policy Businesses are likely to resume hiring and capital spending next year once lawmakers reach a resolution on fiscal policy. Orders for capital goods excluding defense equipment and aircraft, a proxy for future business investment, climbed 1.7 percent in October, the most in five months, Commerce Department figures showed Nov. 27. Xerox Corp. (XRX), the Norwalk, Connecticut-based provider of printers and business services, is among companies waiting for the outlook to become clearer. While the U.S. “got a bit weaker” during the third quarter mainly due to the uncertainty around the fiscal cliff, a “positive conclusion” is expected, according to Chief Financial Officer Luca Maestri. “We may see an improved economic environment in the U.S. going into 2013,” Maestri said on a conference call with analysts yesterday. “For the moment, we continue to foresee this level of softness until the issues in Washington have resolved.” Fed Chairman Ben S. Bernanke has said an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth. “A plan for resolving the nation’s longer-term budgetary issues without harming the recovery could help make the new year a very good one for the American economy,” Bernanke said in a Nov. 20 speech.
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#1. To: Brian S (#0)
Great news! Meth and crack sales seem to be up also based on local news drug busts.
All that growth came from a mystery inventory adjustment number.
You mean they're fudging the books? For whose benefit?
Fred Mertz: "You mean they're fudging the books? For whose benefit?" The Top .01% The Level where military, religion, acquisition fades before Ultimate Power. Globalization fails, Deflation takes hold and the 6 Top Central Banks lose all control. To keep control, the Ponzi is extended at ALL costs. ;} And THIS would be why calcon thought we had so much in common. Calcon's fault was that you, Boris, were questioning THIS from the Right side of the political spectrum. What do these Military Men have in common: Darlak, Sinclair, Gaouette, O'Reilly, Ward, Ham, Petraeus, Allen They were Summarily Unconditionally dismissed from Commands. They wanted to not only continue the War of 9/11 but expand it. ;}
#2. To: Fred Mertz (#1)
#3. To: mcgowanjm (#2)
#4. To: Fred Mertz (#1)
#5. To: Fred Mertz (#3)
You mean they're fudging the books? For whose benefit?
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