Washington: The US economy grew 3.1 percent in the third quarter, faster than previously estimated, the Commerce Department said Thursday as analysts cautioned against too much optimism.
Gross domestic product growth in the July-September period was revised upward from prior estimates of 2.7 percent and 2.0 percent, the department said.
The higher figure reflects upward revisions to consumer spending, exports and government outlays, and a downward revision to imports.
In the second quarter, real GDP increased 1.3 percent.
The Commerce Department said the modification “has not greatly changed the general picture of the economy for the third quarter except that personal consumption expenditures is now showing a modest pickup, and imports is now showing a downturn.”
Personal consumption increased 1.6 percent during the third quarter, compared to 1.5 percent in the previous quarter.
Analysts, while noting the revision was higher than expected, had mixed reviews of the backward-looking indicator.
“While strong on the surface, the core of the third quarter still looks much softer than the headline,” said Robert Kavcic of BMO Capital Markets Economics.
Joel Naroff of Naroff Economic Advisors was more positive.
“Guess what? The economy really did grow solidly during the summer,” he said.
Looking forward, Barclays Research predicted GDP growth was likely to be “somewhat softer” in the current and final quarter of the year.
However, it said a stronger backdrop in the third quarter “leaves growth on a solid footing and we expect the picture of modestly above potential growth to remain in place.”
Separately, the Conference Board said Thursday its forward-looking leading economic index, also released Thursday, declined 0.2 percent in November to 95.8, following a 0.3 percent increase in October and a 0.4 percent rise in September.
Ken Goldstein, a Conference Board economist, said: “The indicators reflect an economy that remains weak in the face of strong domestic and international headwinds, as it faces a looming fiscal cliff. Growth will likely be slow through the early months of 2013.”
The latest data releases comes amid concern about the so-called fiscal cliff — a combination of tax hikes and spending cuts set to take effect in January that could take the United States back into recession. For weeks, Washington has been wrangling over the matter but, with a deadline looming, a deal remains elusive.
Nigel Gault, economist at IHS Global Insight, said all will depend on the resolution of the “fiscal cliff” talks.
“The longer the negotiations drag on — especially if they extend into January — the more the uncertainty will hurt consumer and business confidence, and willingness to spend,” he said.
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