US economy grows 2% in Q3

Fri, Oct 26, 2012, 01:00

The US economy expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction.

Gross domestic product, the value of all goods and services produced, rose at a 2 per cent annual rate after climbing 1.3 per cent in the prior quarter, Commerce Department figures showed today in Washington.

A housing rebound is helping mend Americans' finances and confidence, indicating the pickup in demand for expensive items such as automobiles can be sustained.

The data is likely to play a role in the upcoming election, allowing President Barack Obama to say the economy is heading in the right direction, while challenger Mitt Romney may argue growth is not fast enough.

"The household side is doing better, that comes through pretty clearly," said Dean Maki, chief US economist in New York for Barclays, who correctly forecast the rate of growth.

"Housing, which was in a deep hole, is also expanding. The fact that both of these are improving is an encouraging sign."

The rate of growth would have been stronger if not for the drought that affected crops in the Midwest.

The GDP estimate is the first of three for the quarter, with the other releases scheduled for November and December when more information becomes available.

Bloomberg

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