Business, Economics and Jobs

US economy grew at rate of 2% in third quarter


The US economy grew at a better-than-expected rate of 2 percent in the third quarter, boosted in part by consumer spending.


Scott Olson

The American economy grew at a better-than-expected, but still modest rate of 2 percent in the third quarter, from July to September, buoyed by consumer spending and the federal government, according to figures released on Friday.

The Commerce Department said growth in the period accelerated from 1.3 percent in the previous quarter, from April to June, according to the Associated Press.

The New York Times said the GDP was also aided by a stronger housing market and defense spending, but economists warned that growth would slow if exports remained weak and businesses were uncertain about policy in Washington.

"Growth rates this low will not reliably lower joblessness in the years to come," said Josh Bivens, research and policy director for the Economic Policy Institute, according to CNNMoney.

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CNNMoney noted that a major economic theory suggests that growth needs to be around 3 percent a year to lower unemployment by one percentage point. The unemployment rate in September was 7.8 percent.

The Wall Street Journal reported that consumer spending accounted for most of the increase in GDP, with expenditures climbing 2 percent compared to 1.5 percent in the second quarter. It also noted that federal government spending, especially in national defense, jumped 9.6 percent, compared to a .2 percent fall in the second quarter.

Despite the better-than-expected numbers, economists fear that the drop in exports and business investment, coupled with the recession in Europe and the decrease of demand in China, will lead to a slow down in growth in the next quarter.

This is the last economic report to be released before the presidential election on Nov. 6, in which the economy and job growth will play a huge role.

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