U.S. Economy Up 2.9% in 3rd Quarter; Twice Rate in 1st Half
The U.S. economy grew at a moderate 2.9% annual pace in the third quarter, better than earlier estimated, and is advancing even more strongly as the year draws to a close.
Previously, the Commerce Department had estimated seasonally adjusted growth in the gross domestic product, the sum of goods and services produced within U.S. borders, at 2.7%.
The latest rate, reported Wednesday, is more than double the anemic 1.4% growth recorded in the first half.
And analysts said the economy was undergoing a further pickup, reflecting a revival in housing construction, improved consumer spending and heavy investment in new equipment by businesses.
“In the fourth quarter . . . what was strong will continue to be strong, or even stronger, particularly housing,” said economist Stuart G. Hoffman of PNC Bank Corp. in Pittsburgh.
Housing construction shot up at an 11.9% annual rate in the third quarter. Consumer spending, meanwhile, rose at a brisk 4.4% rate, driven partly by purchases of goods to put in newly acquired homes.
Purchases of durable goods, which includes furniture and appliances, rose at a 7.6% rate.
“You buy a house and the next thing you know you need a couch and a bed,” said economist David Wyss of DRI-McGraw Hill, a Lexington, Mass., forecasting firm.
If not for crop losses from the Midwestern floods and the Southern drought, the third-quarter GDP gain would have been an even better 3.5%.
Analysts said rebound from the flood is contributing to growth in the current quarter, expected at 4% or better.
“We’re seeing flood replacement. Household spending seems quite strong in the Midwest, and some of that reflects replacement of carpeting and furniture damaged in the floods,” said economist Lawrence Chimerine of the Economic Strategy Institute, a Washington-based think tank.
Analysts warned, however, that the pace of activity probably will subside, although not sharply, as 1994 gets under way.
Meanwhile, corporate profits in the third quarter rose to an annual rate of $274.3 billion, up 0.7% from the second quarter, when they rose 5.2%.
