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| U.S. Economy Grew at 2% Rate in 3rd Quarter | U.S. Economy Grew at 2% Rate in 3rd Quarter |
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| The United States economy grew at an annual rate of 2 percent in the third quarter, slightly better than expected, with help from a healthier housing sector and a pickup in defense spending. But economists warn that growth could slow in the final quarter of the year if weakness in exports persists and businesses remain cautious because of fiscal uncertainty in Washington. | The United States economy grew at an annual rate of 2 percent in the third quarter, slightly better than expected, with help from a healthier housing sector and a pickup in defense spending. But economists warn that growth could slow in the final quarter of the year if weakness in exports persists and businesses remain cautious because of fiscal uncertainty in Washington. |
| The new figure, released by the Commerce Department on Friday, is the government’s first estimate of growth in the third quarter. It compares with the 1.3 percent pace of growth in the second quarter. In the first quarter of 2012, the economy also grew by 2 percent. | The new figure, released by the Commerce Department on Friday, is the government’s first estimate of growth in the third quarter. It compares with the 1.3 percent pace of growth in the second quarter. In the first quarter of 2012, the economy also grew by 2 percent. |
| The report comes amid fears that companies are clamping down on spending in the face of potential tax increases and spending cuts, a recession in parts of Europe and a deceleration in demand from China. Some economists fear that all these factors will keep a lid on any pickup in growth in the final quarter of 2012 and the first quarter of 2013. | |
| Exports, for example, decreased by 1.6 percent in the latest quarter, compared with a 5.3 percent increase in the second quarter. | |
| The slow pace of growth since the end of the last recession has been a dominant theme in the presidential race, with Republicans pointing to recent data as evidence that the economy is moving too slowly to make a meaningful dent in unemployment. | The slow pace of growth since the end of the last recession has been a dominant theme in the presidential race, with Republicans pointing to recent data as evidence that the economy is moving too slowly to make a meaningful dent in unemployment. |
| In recent days, government data and earnings reports from corporate bellwethers have suggested that companies are becoming more cautious. On Thursday, the Commerce Department reported that orders for nondefense capital goods, excluding aircraft, were flat in September, disappointing experts who had forecast a slight gain. | In recent days, government data and earnings reports from corporate bellwethers have suggested that companies are becoming more cautious. On Thursday, the Commerce Department reported that orders for nondefense capital goods, excluding aircraft, were flat in September, disappointing experts who had forecast a slight gain. |
| But there were several elements of good news for the White House in Friday’s report. Consumer spending rose at a seasonally adjusted annual rate of 2 percent, compared with 1.5 percent in the second quarter. Residential investment increased at an annual rate of 14.4 percent in the third quarter, versus 8.5 percent in the second quarter, a positive sign for the housing sector. | |
| Among the biggest factors in Friday’s report was a 13 percent jump in defense spending. Without that increase, gross domestic product would have grown at an annual rate of 1.4 percent, said Steve Blitz, chief economist at ITG Investment Research. | Among the biggest factors in Friday’s report was a 13 percent jump in defense spending. Without that increase, gross domestic product would have grown at an annual rate of 1.4 percent, said Steve Blitz, chief economist at ITG Investment Research. |
| “The economy really just continues to churn at a very slow rate,” he said. Two big engines that initially powered the economy in the wake of the recession — exports and business investment — have both been fading recently, he said, and that does not bode well for future growth. | |
| Nigel Gault, chief United States economist for IHS Global Insight, added that while the uncertainty hanging over businesses did not seem to be affecting consumers, that could change if Washington did not avert a wave of tax increases and automatic spending cuts set to go into effect early next year. This so-called fiscal cliff is already being blamed for a chill in spending on equipment and software by businesses, which fell 0.1 percent in the third quarter. | Nigel Gault, chief United States economist for IHS Global Insight, added that while the uncertainty hanging over businesses did not seem to be affecting consumers, that could change if Washington did not avert a wave of tax increases and automatic spending cuts set to go into effect early next year. This so-called fiscal cliff is already being blamed for a chill in spending on equipment and software by businesses, which fell 0.1 percent in the third quarter. |
| “Consumers are not so forward looking as businesses,” Mr. Gault said. “So there are two ways this can go. Either we clear up the uncertainty or consumers start focusing on the fiscal cliff and we see consumer spending hurt as well.” | “Consumers are not so forward looking as businesses,” Mr. Gault said. “So there are two ways this can go. Either we clear up the uncertainty or consumers start focusing on the fiscal cliff and we see consumer spending hurt as well.” |