Kenneth probably read the following article:
WRAPUP 2-U.S. growth surged in third quarter, spending up
Reuters, 12.23.03, 11:20 AM ET
By Glenn Somerville
WASHINGTON, Dec 23 (Reuters) - The U.S. economy grew at its fastest rate in nearly 20 years in the third quarter, boosted by robust consumer spending that carried into the closing months of the year, government reports showed on Tuesday.
The Commerce Department said gross domestic product advanced at an 8.2 percent annual rate in the three months from July through September -- the same as the department estimated a month ago and more than double the 3.1 percent pace posted in the second quarter.
GDP measures the value of goods and services produced within U.S. borders and is the broadest gauge of total national economic activity. The third-quarter advance was the strongest since an 8.4 percent jump in the fourth quarter of 1983.
Signs of buoyant economic growth already are giving President George W. Bush a lift in polls ahead of next year's 2004 presidential elections.
An ABC News/Washington Post poll on Monday showed Bush's overall approval rating at 59 percent. The poll found a majority of Americans -- 51 percent -- approved of his handling of the economy. It was the first time he was above 50 percent since late April.
SLOWER BUT STEADY
While the pace of GDP growth is forecast to ease to around half the third-quarter rate during the final quarter of 2003, that still is a healthy rate of expansion and one that is predicted to be sustained or to accelerate moderately in 2004.
Corporate profits after taxes advanced at a solid 10.1 percent annual rate, down slightly from a 13.8 percent rate of increase in the second quarter.
Recent economic data have shown a strengthening manufacturing sector as well as continued high levels of new-home building and home sales, which have benefited from the lowest mortgage rates in decades.
Most economists expect the Federal Reserve, the U.S. central bank, will begin ratcheting official interest rates higher in 2004 if the upbeat pace of economic activity is sustained, but likely not until during the second quarter.
A separate Commerce Department report underlined the economy's momentum in the waning months of the year, showing consumer spending grew 0.4 percent in November to a seasonally adjusted annual rate of $7.896 trillion after gaining 0.1 percent in October.
Incomes rose a solid 0.5 percent to an annual rate of $9.335 trillion after a smaller 0.3 percent rise in October.
Consumers fuel two-thirds of U.S. economic activity through their purchases of goods and services, so changes in gauges of consumer confidence are closely monitored.
FICKLE SPENDERS
A survey by the University of Michigan and issued only to paying customers illustrated the fickle nature of sentiment, dipping in December to a reading of 92.6 from 93.7 in November, according to market sources. But the sources said sentiment perked up at mid-month after the capture of Saddam Hussein, a positive note ahead of vital holiday shopping.
Inventories fell at a $9.1 billion annual rate in the third quarter, double the $4.5 billion rate of decrease in the second quarter.
Coupled with strong consumer spending, this may imply that companies are being forced to meet demand from current production, increasing the likelihood they will have to increase output.
"At the margin that points to an even greater need to rebuild inventories, which will tend to support output going forward," said economist Jade Zelnik of RBS Greenwich Capital markets in Greenwich, Conn.
David Durant, an economist with Bank Julius Baer in New York, said the rise in incomes during November meant consumers should continue to have spending power as the year ends.
"The faster income rise, the better spending will be," Durant said. "But income rising faster than spending is good for the future, which shows a firming of the economy."
Copyright 2003, Reuters News Service |
