The U.S. economy grew at a slightly slower pace over the summer than the government had previously estimated, and most economists foresee a slight acceleration in the current quarter and stronger growth in the first half of 2016, the Associated Press reports.
The Commerce Department says this morning that the economy, as measured by the gross domestic product, expanded at a 2% annual rate in the July-September quarter. That was a bit lower than its previous estimate of 2.1%, a result of less restocking by businesses than previously estimated.
Last quarter’s expansion was significantly below the 3.9% annual GDP growth in the second quarter. The slowdown reflected a cutback in the pace of inventory restocking. Economists say they think growth in the final quarter will amount to around a 2.2% rate, helped by solid consumer spending.
According to The Associated Press, the government’s latest estimate showed slower growth in business stockpiles shaved 0.7 percentage point from third quarter growth, larger than the 0.6 percentage point reduction earlier estimated. The government revises its GDP estimates as new data comes in.
The 3.9% annual growth in the April-June quarter followed a barely discernible 0.6% increase in the January-March quarter. Growth in the first quarter was depressed by an unusually severe winter and disruptions at West Coast ports.
Economists’ expectation is that the economy is growing at a moderate annual rate of around 2.2% in the current quarter and will accelerate to a 2.3% rate or higher in the first half of next year.
Entering the new year, economists are forecasting that consistent strength in the job market will boost household incomes and support solid consumer spending, which accounts for about two-thirds of economic activity.
Last quarter, consumer spending grew at a solid 3% pace, unchanged from the previous estimate. Business investment on structures fell at a 7.2% annual rate, slightly worse than previously thought, as cutbacks in oil and gas exploration hurt the energy sector. Business investment in equipment shot up at a 9.9% annual rate.
The Associated Press has the full story.
