Sputtering Economy
The U.S. economy is showing a faint pulse after the nation’s GDP rose at a 2 percent annual rate in the July-through-September quarter. That was a slight improvement from the 1.7 percent growth rate in the second quarter and the fifth straight quarter of expansion.
However, experts say the feeble growth is still not enough to impact jobs. Spending by U.S. consumers, the largest component of GDP, led the spurt, rising in the third quarter to a 2.6 percent annual rate. Most consumer spending was for overseas products, reducing the potential growth by 2%.
Another major factor in growth was the rise in business inventories, but that it is unlikely to be repeated in future quarters and firms may even need to cut back on inventories, detracting from future growth.
Economist Josh Bivens of the Economic Policy Institute stated, “The most striking thing about today’s report on gross domestic product is that it shows that the U.S. economy is still smaller today than it was when the recession began — even more than a year after the recession officially ended.”
The lackluster report is unlikely to change anyone’s mind at the Federal Reserve about whether to begin a new program of lowering long-term interest rates. At their meeting on Wednesday, the Fed is expected to announce it will begin buying long-term U.S. Treasury debt.
