The Wall Street Journal reports,"Gross domestic product, the broadest measure of goods and services produced across the economy, grew at an annual rate of 2.8% in the July-through-September period, the Commerce Department said Thursday. That followed 2.5% growth in the second quarter and marked the fastest rate of growth in a year.
The report offered a snapshot of the nation's economic health in the months leading into the 16-day partial government shutdown that began Oct. 1. The higher growth mainly reflected companies' moves to replenish inventories and a pickup in spending by state and local governments".
"But those developments masked worrisome trends—namely, weaker overall spending by consumers and companies' cutting back on equipment purchases. Those could be signs Americans and businesses lost confidence as mortgage rates rose and the prospect of a shutdown and debt-ceiling crisis loomed.
The report offered a snapshot of the nation's economic health in the months leading into the 16-day partial government shutdown that began Oct. 1. The higher growth mainly reflected companies' moves to replenish inventories and a pickup in spending by state and local governments".
"But those developments masked worrisome trends—namely, weaker overall spending by consumers and companies' cutting back on equipment purchases. Those could be signs Americans and businesses lost confidence as mortgage rates rose and the prospect of a shutdown and debt-ceiling crisis loomed.
Consumer spending, which accounts for more than two-thirds of GDP, grew at a paltry 1.5%, matching the slowest pace of growth in more than 3½ years. While consumers stepped up spending on long-lasting items such as cars, they slowed spending on services.
Overall investment across the economy grew 9.5% after rising 9.2% in the second quarter, largely reflecting strength in the housing sector. However, business spending on nonresidential equipment—a key measure of companies' willingness to invest—fell for only the second time since the recovery began more than four years ago. The 3.7% drop is a sign companies may have become skittish as political battles over the federal budget and debt ceiling loomed.
Meantime, exports grew 4.5%, after rising 8.0% in the second quarter.
The latest data point to an economy growing at roughly the same subpar pace that has plagued the recovery, now in its fifth year. Many economists had predicted growth would accelerate in the second half of the year as the effects of tax increases and federal spending cuts eased. That now appears increasingly unlikely".
