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| (AP) After posting a decline in September, the Conference Board's Consumer Confidence Index jumped to... Full Image |
Posted on 10/30/2003 6:47:26 AM PST by Skooz
By JEANNINE AVERSA
(AP) After posting a decline in September, the Conference Board's Consumer Confidence Index jumped to... Full Image
WASHINGTON (AP) - The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.
The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported Thursday.
The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.
The economy's recovery from the 2001 recession has resembled the side of a jagged cliff; a quarter of strength often has been followed by a quarter of weakness. But analysts are saying that pattern could be broken, considering increasing signs the economy finally has shaken its lethargy and is perking up.
(AP) New-home sales edged down in September but nevertheless registered their third-highest level on... Full Image Near rock-bottom short-term interest rates, along with President Bush's third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists say. The next challenge is making sure the rebound is self-sustaining, they say.
Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth.
Although the nation's payrolls grew by 57,000 in September - the first increase in eight months - the economy needs to add a lot more jobs than that each month to drive down the 6.1 percent unemployment rate, analysts have said.
The administration has argued that as economic growth improves, meaningful job creation will follow. Bush will be counting on that as he heads into the 2004 presidential election season.
In other encouraging economic news from the Labor Department, new claims for unemployment benefits last week dropped by 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits went up by 1 percent in the third quarter, up slightly from a 0.9 percent increase in the previous quarter.
(AP) New-home sales edged down in September but nevertheless registered their third-highest level on... Full Image Amid signs that the recovery is regaining traction, the Federal Reserve on Tuesday decided to hold a key short-term interest rate at a 45-year low of 1 percent. Super-low short-term rates may give consumers and businesses an incentive to spend and invest more, boosting economic growth.
Economists believe the economy will grow at a slower - but still healthy - 4 percent rate in the final quarter.
In the third quarter, consumers ratcheted up their spending at a brisk 6.6 percent annual rate. That was the biggest increase since the first quarter of 1988 and was up from a 3.8 percent pace in the second quarter.
Consumers in the third quarter spent lavishly on big-ticket items, such as cars, boosting such spending by a whopping 26.9 percent rate. And, they also spent briskly on "nondurables" such as food and clothes, which grew at a 7.9 percent pace, the strongest showing since the first quarter of 1976.
While consumers have been the main force keeping the economy going, there are more signs that businesses are starting to do their part.
(AP) The nation's economy continued to rebound in September, but appeared to slow after rapid growth... Full Image Especially encouraging was the 15.4 percent growth rate in spending by businesses on equipment and software in the third quarter. That marked the largest increase since the first quarter of 2000 and was up from a 8.3 percent growth rate in the second quarter.
Sustained turnarounds in capital spending and in hiring are crucial to the economy's return to full throttle. Economists said business wants profits to improve and wants to be sure of the recovery's vigor before it goes on a spending and hiring spree.
The red-hot housing market, powered by low mortgage rates, also contributed to the strong showing on third quarter GDP. Investment on residential projects grew at a 20.4 percent rate, the biggest increase since the second quarter of 1996, and more than three times the 6.6 percent growth rate seen in the second quarter.
Federal government spending, which grew at a 1.4 percent rate, was only a minor contributor to GDP in the third quarter. Spending on national defense was flat. But in the second quarter, military spending on the Iraq war - which grew at a whopping 45.8 percent rate - helped to catapult economic growth.
A better trade picture in the third quarter also contributed to GDP growth.
But inventory reduction by businesses continued to be a drag on the economy and reduced third-quarter GDP by 0.67 percentage point. And a continuing reluctance by businesses to build up stocks suggest that executives remain wary of the rebound's staying power.
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| (AP) After posting a decline in September, the Conference Board's Consumer Confidence Index jumped to... Full Image |
Economy Grows at Fastest Pace Since 1984
Oct 30, 8:54 AM (ET) By JEANNINE AVERSA
WASHINGTON (AP) - The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence. The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported Thursday. The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States. The economy's recovery from the 2001 recession has resembled the side of a jagged cliff; a quarter of strength often has been followed by a quarter of weakness. But analysts are saying that pattern could be broken, considering increasing signs the economy finally has shaken its lethargy and is perking up.
Democrats, however, argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth. Although the nation's payrolls grew by 57,000 in September - the first increase in eight months - the economy needs to add a lot more jobs than that each month to drive down the 6.1 percent unemployment rate, analysts have said. The administration has argued that as economic growth improves, meaningful job creation will follow. Bush will be counting on that as he heads into the 2004 presidential election season. In other encouraging economic news from the Labor Department, new claims for unemployment benefits last week dropped by 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits went up by 1 percent in the third quarter, up slightly from a 0.9 percent increase in the previous quarter.
Economists believe the economy will grow at a slower - but still healthy - 4 percent rate in the final quarter. In the third quarter, consumers ratcheted up their spending at a brisk 6.6 percent annual rate. That was the biggest increase since the first quarter of 1988 and was up from a 3.8 percent pace in the second quarter. Consumers in the third quarter spent lavishly on big-ticket items, such as cars, boosting such spending by a whopping 26.9 percent rate. And, they also spent briskly on "nondurables" such as food and clothes, which grew at a 7.9 percent pace, the strongest showing since the first quarter of 1976. While consumers have been the main force keeping the economy going, there are more signs that businesses are starting to do their part.
Sustained turnarounds in capital spending and in hiring are crucial to the economy's return to full throttle. Economists said business wants profits to improve and wants to be sure of the recovery's vigor before it goes on a spending and hiring spree. The red-hot housing market, powered by low mortgage rates, also contributed to the strong showing on third quarter GDP. Investment on residential projects grew at a 20.4 percent rate, the biggest increase since the second quarter of 1996, and more than three times the 6.6 percent growth rate seen in the second quarter. Federal government spending, which grew at a 1.4 percent rate, was only a minor contributor to GDP in the third quarter. Spending on national defense was flat. But in the second quarter, military spending on the Iraq war - which grew at a whopping 45.8 percent rate - helped to catapult economic growth. A better trade picture in the third quarter also contributed to GDP growth. But inventory reduction by businesses continued to be a drag on the economy and reduced third-quarter GDP by 0.67 percentage point. And a continuing reluctance by businesses to build up stocks suggest that executives remain wary of the rebound's staying power. |
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Nice!
You're so right. Isn't it ironic that the 'Rats, who thought that they would be down-playing "foreign policy" (Iraq and the War on Terror) and attacking the President on the economy, may now find all their hopes are pinned on convincing the American electorate that we're "losing the peace" in Iraq.
GDP growth in Q3 is strongest since 1984
Gross domestic product surged at a 7.2% annual rate in the July-September period, the Commerce Department said. It was the strongest advance since the first quarter of 1984 and more than double the second quarter's 3.3% rate.
The increase handily outstripped consensus forecasts. Most economists had looked for a growth rate closer to 6%.
In other encouraging economic news from the Labor Department, new claims for unemployment benefits last week dropped 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits rose 1% in the third quarter, up slightly from a 0.9% increase in the previous quarter.
The GDP report said consumer spending rose at a hefty 6.6% pace as lower tax withholding on paychecks and child tax credit checks put more cash into shoppers' hands. It was the biggest increase in consumer outlays since early 1988.
Congress passed a $350 billion White House tax plan in the spring that lowered tax-withholding rates in July and pumped out about $13.7 billion dollars in child tax credit checks in July and August.
Most economists expect growth to cool but come in around a solid 4% in the final quarter of the year and through 2004. But some have expressed lingering concerns that growth could falter as the tax-cut impact fades, particularly if jobs growth — which has been sorely lacking — does not pick up soon.
Democrats argue that the tax cuts contributed to a record budget deficit in the recently ended 2003 fiscal year and have done little to spur significant job growth.
Although the nation's payrolls grew by 57,000 in September — first increase in eight months — the economy needs to add a lot more jobs each month to drive down the 6.1% unemployment rate, analysts say.
Business spending, which has been slack as the economy climbed out of recession, rose at a 11.1% annual rate in the third quarter, steepest climb since the first quarter of 2000 and the second straight quarterly advance. Cuts in business spending had long been the missing link for a broader recovery as companies showed a reluctance to commit to long-term spending plans.
The third-quarter increase in business investment reflected a sharp pick-up in spending on equipment and software, which moved forward at a 15.4% annual pace. In contrast, spending on structures dipped.
The red-hot housing market, powered by low mortgage rates, also contributed to the strong showing on third-quarter GDP. Investment on residential projects grew at a 20.4% rate, biggest increase since the second quarter of 1996, and more than three times the 6.6% growth rate seen in the second quarter
A shrinking U.S. trade deficit also helped growth, and ensured that sales of U.S.-produced goods and services rose at an even faster pace than GDP — a 7.8% rate that marked the strongest performance in more than 25 years.
Government spending also rose, even though defense spending was flat after giving a big boost to growth in the second quarter.
The report also offered a sign that inflation was starting to move up after a sharp slowdown earlier this year that fueled worry about the possibility of deflation. The price index for consumer spending, excluding volatile food and energy costs, rose at a 1.8% annual rate, accelerating from the second quarter's 1.1% advance.
Contributing: Associated Press
B-b-b-b-bu-bu-- AWWW! *sniffle*"
--Runs away for kleenex--
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