GDP Growth 3.5% in 3rd Quarter
The stimulus package in action:
GDP Expanded 3.5% in 3rd Quarter, WSJ: The economy expanded in the third quarter after shrinking for four consecutive quarters, likely marking an end to the worst recession since World War II. But the recovery is expected to be slow, as the economy continues to fight rising unemployment and a persistent credit crunch.
Gross domestic product rose by a higher-than-expected seasonally adjusted 3.5% annual rate July through September, the Commerce Department said Thursday in its first estimate of third-quarter GDP. ... The rise in GDP was the first since the second quarter of 2008. It served as an unofficial confirmation that the longest and deepest recession since the Great Depression has ended. ...
The GDP gain was driven by consumer spending, which rose by 3.4% in the third quarter, compared with a 0.9% drop in the April-to-June period. Consumer spending contributed 2.36 percentage points to GDP growth.
Economists said the massive stimulus injected by the U.S. government, such as the cash for clunkers program that lifted car sales, helped boost consumer spending. Since the federal stimulus reached its maximum effect in the third quarter and the unemployment rate remains high, there's uncertainty over the sustainability of the recovery.
Price gauges showed the core inflation rate -- which strips out volatile food and energy prices and is closely watched by the Federal Reserve -- slid to 1.4% from 2.0% in the second quarter, in a sign that price pressures remain subdued. ...
While the economy has resumed rising, joblessness is still high. ... The number of U.S. workers filing new claims for jobless benefits fell slightly last week... Initial claims for jobless benefits declined by 1,000 to 530,000 in the week ended Oct. 24. The previous week's level was unrevised at 531,000. ... Claims still remain at a fairly high level, suggesting the job market has a long recovery ahead. ...
I hope we don't become overly optimistic and pull back on help for the economy too soon, we don't know for sure if the increase in growth is sustainable without help from the stimulus package, and I also hope that we don't forget about labor markets which are likely to lag far behind the recovery for output.
Posted by Mark Thoma on Thursday, October 29, 2009 at 08:40 AM in Economics |
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