The dreaded "double-dip" still is a no-show.
When the government on Thursday issues its first estimate of third-quarter U.S. gross domestic product, the report is expected to show a sharp acceleration in economic growth from the first half.
Real GDP grew at an annualized rate of 2.5% in the three months ended Sept. 30, according to the average estimate of economists in a Bloomberg News survey.
That would be a jump from growth of just 1.3% in the second quarter and an even more paltry 0.4% in the first quarter.
A growth rate of 2.5% isn’t robust, but it’s also a far cry from expectations that the economy was on the cusp of a double-dip recession, meaning shrinkage, for the first time since 2009.
Economists have had to scramble to boost their growth estimates over the last month or so as the outlook clearly has improved. Brokerage firm UBS raised its third-quarter estimate to 2.7% from 1.5%. Ian Shepherdson at High Frequency Economics is forecasting a 3% growth rate, which would be the best pace since the economy grew at a 3.8% rate in the second quarter of 2010.
What happened to the double-dip?
Despite the financial markets’ mini-crash in early August tied to the U.S. credit-rating downgrade and Europe’s continuing debt crisis, American consumers’ spending actually picked up in the third quarter from the spring. U.S. retail sales jumped 1.1% in September from August, the best growth since February, government data show.
People may be feeling worse about the economy -- as reflected in dismal reports on consumer confidence -- but how they feel and what they do apparently are two different things.
The economy also got help in the third quarter from continued strong business investment, as companies put cash to work. UBS forecasts that business spending on equipment and software jumped at a 15% annualized rate in the quarter, up from 6.2% growth in the second quarter.
Click here for article on "Recession fears eased as economy grows at 25 percent in third quarter"
Real GDP grew at an annualized rate of 2.5% in the three months ended Sept. 30, according to the average estimate of economists in a Bloomberg News survey.
That would be a jump from growth of just 1.3% in the second quarter and an even more paltry 0.4% in the first quarter.
A growth rate of 2.5% isn’t robust, but it’s also a far cry from expectations that the economy was on the cusp of a double-dip recession, meaning shrinkage, for the first time since 2009.
Economists have had to scramble to boost their growth estimates over the last month or so as the outlook clearly has improved. Brokerage firm UBS raised its third-quarter estimate to 2.7% from 1.5%. Ian Shepherdson at High Frequency Economics is forecasting a 3% growth rate, which would be the best pace since the economy grew at a 3.8% rate in the second quarter of 2010.
What happened to the double-dip?
Despite the financial markets’ mini-crash in early August tied to the U.S. credit-rating downgrade and Europe’s continuing debt crisis, American consumers’ spending actually picked up in the third quarter from the spring. U.S. retail sales jumped 1.1% in September from August, the best growth since February, government data show.
People may be feeling worse about the economy -- as reflected in dismal reports on consumer confidence -- but how they feel and what they do apparently are two different things.
The economy also got help in the third quarter from continued strong business investment, as companies put cash to work. UBS forecasts that business spending on equipment and software jumped at a 15% annualized rate in the quarter, up from 6.2% growth in the second quarter.
On Thursday, the government said orders for big-ticket items rose strongly last month, further stoking optimism about third-quarter growth.
Still, many economists believe that overall U.S. growth will decelerate again in the current quarter. The third quarter benefited in part from revived manufacturing that had been crimped by bottlenecks related to Japan's earthquake in March.
More important, some economists see consumers running out of buying power as incomes remain squeezed. With unemployment at 9.1%, companies have the leverage to keep wage growth low or nonexistent.
"The recent pickup in consumer spending has not been the result of an acceleration in real disposable income, suggesting that it is likely to be only temporary,” said Steven Ricchiuto, chief economist at Mizuho Securities in New York.
But that also may depend on whether more consumers decide they'd rather spend than save, as near-zero interest rates offer little incentive to put money aside. Third-quarter spending got a boost as U.S. saving as a percentage of disposable income fell to 4.5% in August, the lowest since 2009.
Article from LA Times Money
Still, many economists believe that overall U.S. growth will decelerate again in the current quarter. The third quarter benefited in part from revived manufacturing that had been crimped by bottlenecks related to Japan's earthquake in March.
More important, some economists see consumers running out of buying power as incomes remain squeezed. With unemployment at 9.1%, companies have the leverage to keep wage growth low or nonexistent.
"The recent pickup in consumer spending has not been the result of an acceleration in real disposable income, suggesting that it is likely to be only temporary,” said Steven Ricchiuto, chief economist at Mizuho Securities in New York.
But that also may depend on whether more consumers decide they'd rather spend than save, as near-zero interest rates offer little incentive to put money aside. Third-quarter spending got a boost as U.S. saving as a percentage of disposable income fell to 4.5% in August, the lowest since 2009.
Article from LA Times Money
Click here for article on "Recession fears eased as economy grows at 25 percent in third quarter"
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