The economy in the U.S. expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.
A housing rebound is helping mend Americans’ finances and confidence, indicating the pickup in demand for expensive items such as automobiles can be sustained. The data is likely to play a role in the upcoming election, allowing President Barack Obama to say the economy is heading in the right direction, while challenger Mitt Romney may argue growth is not fast enough.
“The household side is doing better, that comes through pretty clearly,” said Dean Maki, chief U.S. economist in New York for Barclays Plc, who correctly forecast the rate of growth. “Housing, which was in a deep hole, is also expanding. The fact that both of these are improving is an encouraging sign.”
The rate of growth would have been stronger if not for the drought that affected crops in the Midwest. A drop in farm inventories subtracted 0.4 percentage point from third-quarter GDP after cutting 0.2 point in the prior period, the report showed.
Stock-index futures pared losses after the report. The contract on the Standard & Poor’s 500 Index maturing in December fell less than 0.1 percent to 1,407.2 at 9 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10- year note down to 1.79 percent from 1.82 percent late yesterday.
Economists’ estimates for GDP ranged from 0.9 percent to 3.1 percent. The GDP estimate is the first of three for the quarter, with the other releases scheduled for November and December when more information becomes available.
Consumer purchases, the biggest part of the economy, grew at a 2 percent annual rate, up from a 1.5 percent second-quarter gain and compared with a 2.1 percent median forecast in the Bloomberg survey. Purchases added 1.4 percentage point to growth.
Retail sales in September and August had the best back-to- back showing since late 2010 as shoppers snapped up goods from cars to Apple Inc.’s iPhones. Target Corp., the second-biggest U.S. discounter, was among chains topping analysts’ estimates for same-store sales last month.