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The US economy expanded in the July-September quarter at an annual rate of 2.8 per cent, the federal Bureau of Economic Analysis said on Thursday, with growth due chiefly to businesses ramping up their stockpile of goods.
The first estimate of third-quarter gross domestic product had been delayed due to the 16-day Government shutdown during last month’s fiscal crisis.
The final estimate of second-quarter GDP from the Commerce Department’s Bureau of Economic Analysis put growth at an annualized rate of 2.5 per cent, following a 1.1 per cent pace in the first quarter.
The agency “emphasised that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision” due to the Government shutdown.
The third-quarter estimate was near the top of a range of predictions from 87 economists surveyed by Bloomberg News. The forecasts were as low as 1.2 per cent and as high as 3 per cent, with a median expectation of 2 per cent growth.
Expansion in the third quarter was led by growth in business inventories, which could foreshadow slower orders in the fourth quarter as companies work down stockpiles. Excluding inventory shifts, GDP expansion would have been 2 per cent.
The October deadlock in Congress, which saw non-essential Government operations idled in the absence of budget legislation and eventually markets unnerved before a last-minute temporary deal staved-off a technical default on federal obligations, was expected to dent fourth-quarter economic growth.
The fiscal crisis already contributed to a large one-month drop in consumer confidence in October, in the long-running Conference Board survey of consumer sentiment.
White House spokesman Jay Carney called it “solid growth — the 10th straight quarter of economic growth, and an increase in growth each of the last four quarters.” The shutdown, which he blamed on the opposition Republicans who hold a majority in the House of Representatives, “will have a negative impact on the economy and will have a negative impact on job creation.”
“I think the private sector growth embedded in that number is even more robust, and what it tells us is that this economy is poised to continue to grow,” Carney said.
The third-quarter inventory bump off-set slowdowns in consumer spending and business investment, including a decline in equipment purchases.
Annual GDP was estimated at nearly $16.86 trillion.
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