US GDP grows 2.83% in Q3

US GDP grows 2.83% in Q3
The Financial Express, November 25, 2009, Page 20

Reuters, Washington

The US economy grew more slowly than initially thought in the third quarter, held back by strong imports and weak investment in nonresidential structures, hinting at a lackluster recovery. Corporate profits surged, however, as businesses managed to ramp up output even as they were still sharply cutting payrolls, a report from the commerce department showed on Tuesday.

In its second reading of third-quarter gross domestic product, the department said the economy grew at a 2.8% annual rate, rather than the 3.5% pace it estimated last month.

That was a touch below market expectations for a growth pace of 2.9%. It was still the fastest pace since the third quarter of 2007. GDP measures total goods and services output within US borders. “This demonstrates that the rebound was a little bit more subdued than the first print had suggested and highlights some of the headwinds to growth that could continue,” said Julia Coronado, senior US economist at BNP Paribas in New York.

US stock index futures pared gains following the report, while treasury debt prices rose slightly. The return to growth after four straight quarters of decline in output probably ended the most painful US recession in 70 years. The economy contracted at a 0.7% rate in the April-June period.

Surging imports, which outpaced growth in exports, restrained the economic growth rate in the third quarter. Imports jumped 20.8%, the biggest gain since the second quarter of 1985, instead of 16.4%.