The economy in the U.S. expanded more than previously estimated in the third quarter as a narrower trade deficit and gains in inventory overshadowed a smaller gain in consumer spending.
Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 2.8 percent gain. Household purchases climbed at a 1.4 percent rate, the least in more than a year and down from a previously reported 2 percent rate, and income gains were also cut.
“We’re just muddling through,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “The mix between final demand and inventories was far less favorable. The consumer spending numbers are a reflection of the fact that job growth remains sluggish.”
The report helps explain why Federal Reserve policy makers have said they’ll continue to pump money into the economy to spur growth and reduce joblessness. At the same time, an improvement in housing, employment gains and healthier household finances may help underpin consumer purchases, the biggest part of the economy.
Economists’ estimates for GDP, the value of all goods and services produced, ranged from 2 percent to 3 percent. The economy grew 1.3 percent in the second quarter.
Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed, a report from the Labor Department also showed today.
Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey.
Stock-index futures held earlier gains after the reports on optimism lawmakers will reach an agreement in budget talks. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.4 percent to 1,413.2 at 8:55 a.m. in New York.
The slowdown in consumer spending last quarter reflected fewer purchases of auto fuel and services such as utilities, insurance and financial transactions, the Commerce Department report showed. Household purchases rose at a 1.5 percent rate in the previous three months.
The third-quarter gain in consumer purchases was the smallest since the second quarter of 2011 and fell short of the 1.9 percent median forecast in the Bloomberg survey.