The gap between exports and imports narrowed, adding 0.38 point to third-quarter growth. Imports declined at a 0.6 percent rate during the period, the first drop in three years.
Government spending offered more support to growth in the third quarter. State and local government outlays added 0.04 percentage point to GDP, the first contribution since the same three months in 2009. The Commerce Department previously estimated that such spending subtracted 0.04 percentage point from the economy. The upward revision primarily reflected a pickup in investment on structures.
Business investment in equipment and software, which has slumped as companies waited for lawmakers to clarify tax policy, declined at a 2.6 percent annual pace, the most since the second quarter of 2009. It subtracted 0.19 percentage point from the expansion.
Residential investment, on projects like home construction and improvement, climbed at a 13.5 percent annual rate in the third quarter.
Economists project the economy will slow to a 1.4 percent pace in the current quarter, according to the median of 79 economists surveyed by Bloomberg from Dec. 7 to Dec. 12.
Clouding their forecasts is debate over the resolution of the so-called fiscal cliff, a package of more than $600 billion in tax increases and spending cuts in place for January should Congress fail to agree to trim the budget deficit. President Barack Obama and House Speaker John Boehner are at odds over what level of income should be taxed at a higher rate.
Companies are pointing to uncertainty surrounding fiscal policy as one reason they’re holding back on spending.
“The economy is growing but very, very slowly,” Peter McCausland, chairman and founder of Airgas Inc., the largest U.S. distributor of packaged gases, said during a Dec. 5 analyst meeting. “The customer feedback we’re getting is that no one wants to make a decision. We’re always hanging on by our fingernails in this particular quarter.”