...compared to Reagan anyway!!! I wonder why Peter Jennings isn't reporting this news??? (I don't really wonder...that was sarcastic...)
U.S. 3rd-Qtr GDP Grew at 8.2% Rate, Fastest Since '84 (Update2)
Nov. 25 (Bloomberg) -- The U.S. economy grew at an 8.2 percent annual rate in the third quarter, faster than the government initially estimated as companies boosted inventories in September to meet the surge in demand.
The nation's gross domestic product, the value of all goods and services produced, grew from July through September at the fastest pace since the first three months of 1984, when Ronald Reagan was president. The Commerce Department previously reported a 7.2 percent third-quarter growth rate, following a 3.3 percent pace in the second quarter.
``Growth is now super-super strong compared to super strong,'' said Joseph LaVorgna, senior U.S. economist at Deutsche Bank Securities, whose forecast of 8.3 percent was the highest in a Bloomberg News survey.
Consumer spending increased at a 6.4 percent annual rate last quarter, the fastest pace in six years, and retailers such as Williams-Sonoma Inc. restocked shelves to help satisfy anticipated sales. A measure of profit widened to a record $739.7 billion, giving companies confidence to increase spending.
``Inventories declined less than people thought, and there was more production,'' said Kevin Logan, senior economist at Dresdner Kleinwort Wasserstein, who forecast 8.1 percent. ``The rebound in corporate profits will impress people with the idea that business spending will continue to support the economy for the next quarter or two.''
Fourth-quarter GDP is forecast to expand at a slower annual rate than last quarter because consumers will have less cash in their pockets from tax cuts and mortgage refinancing. The first wave of the tax cuts President George W. Bush won from Congress hit during the quarter.
The median forecasts in the Bloomberg survey of 70 economists was 7.8 percent, with estimates ranging from 6.9 percent to 8.3 percent. Economists had raised estimates after a report this month showed that inventories unexpectedly rose in September for the first time in six months.
The benchmark 10-year Treasury note due in November 2013 rose 3/32, pushing its yield down 1 basis point to 4.22 percent at 9:34 a.m.
Adjusted for inflation, GDP totaled $9.82 trillion at an annual rate. Unadjusted for the change in prices, the economy grew at a 10 percent annual rate to $11.06 trillion. Real final sales rose 8 percent, more than the 7.8 percent first estimate.
The pickup in consumer, business and government demand drained inventories at a slower pace in the quarter than the government had estimated following the rise in September stockpiles. Inventories contracted at a $14.1 billion rate, compared with a $35.8 billion drop estimated last month.
Inventories added 0.16 to GDP after the revisions, the first addition since the fourth quarter of 2002. The government had previously estimated a 0.67 percentage point subtraction.
``There was some concern that the building inventories in September could take away from fourth-quarter growth, but I think we may see companies building inventory into the fourth quarter,'' said Lou Crandall, chief economist at Wrightson ICAP LLC, in an interview. Crandall accurately forecast the 8.2 percent increase.
Williams-Sonoma Inc., owner of the Pottery Barn and Williams- Sonoma retail chains, was among companies building inventories as it boosted the amount of merchandise it offers and opened more stores. Chief Executive Officer Edward Mueller, who took over in January, has bolstered inventory at the Pottery Barn and Pottery Barn Kids chains, while adding stores and developing West Elm, a catalog with lower-price furniture.
Residential construction spending rose 22.7 percent, faster than the 20.4 percent growth the government estimated last month. Construction spending jumped in September to a record as private nonresidential building rose the most in 11 months and housing demand held close to the record high, a government report showed earlier this month.
Consumer spending, which accounts for 70 percent of the economy, grew at a 6.4 percent annual pace from July through September, slower than the government's advance estimate last month of a 6.6 percent increase. A government report this month showed that retail sales in October declined as Americans bought fewer automobiles and paid less for gasoline.
Spending on durable goods, including automobiles, rose at a 26.5 percent rate, in line with last month's estimate. Purchases of non-durable goods rose at a 7.6 percent rate, initially reported as a 7.9 percent rise. Services spending increased 2.1 percent.
Cost-cutting and increased demand in the third quarter boosted corporate profits and gave companies confidence to expand and start to resume hiring.
Business fixed investment, which includes spending on commercial construction as well as equipment and software, rose at a 16.7 percent annual rate in the third quarter, revised from a 14 percent increase. Spending on software and equipment rose 18.4 percent.
Earnings after taxes and adjusted for the value of inventories and capital consumption, a gauge favored by many economists because it shows profits from current production, rose 11.6 percent to $739.7 billion.
Lafarge North America Inc. Chief Executive Officer Philippe Rollier said demand for the company's concrete and other construction materials should be good for the rest of the year. Lafarge North America is a unit of France's Lafarge SA
, the world's largest cement company.
``We should have a better year in 2004, and 2005 should be a great year,'' Rollier said in a televised interview with Bloomberg News.
Imports subtracted 0.25 percentage point from growth, compared with the previous estimated subtraction of 0.4 percentage point. Government outlays for national defense fell at a 1.6 percent annual rate.
The Federal Reserve has kept its benchmark interest rate at 1 percent, the lowest since 1958, since June. Fed officials have said they see scant signs of inflation that might make them raise rates any time soon.
The GDP price deflator, a measure of prices tied to the report, was unchanged from the previous estimate at a 1.7 percent pace.
The personal consumption expenditures price index, a measure of inflation watched by Federal Reserve Chairman Alan Greenspan and tied to spending, rose at a 2.3 percent annual pace, originally reported as a 2.4 percent increase. Excluding food and energy, the PCE index rose 1.7 percent at an annual rate.
Gross domestic product will expand at a 4 percent annual rate from October through December, based on the median forecast of 56 economists surveyed by Bloomberg News from Oct. 24 to Nov. 3. The Federal Reserve Bank of Philadelphia said yesterday that its quarterly survey of 34 economists found that forecasters raised their estimate for the fourth quarter to a 4 percent growth rate from 3.9 percent in August.
The Philadelphia Fed's survey also projected that the economy will expand 4.3 percent for all of next year, the fastest since 1998. In a separate survey, the National Association for Business Economics said that its panel of 28 economists forecast 4.5 percent growth in 2004, the fastest since 1984.
Last Updated: November 25, 2003 09:46 EST