Mixed Bag in Tepid GDP Growth
There are signs of life, but the sluggish Obama recovery plods.
The rate at which the nation’s gross domestic product grew in the third quarter failed to reach even pessimistic estimates made ahead of the Commerce Department’s announcement. Economists predicted the economy would grow only 1.6% from July to September. Instead, the economy grew an anemic 1.5%. Contrast this with the second quarter, where GDP grew at a 3.9% rate.
Yet while the GDP number sounds dismal, other economic indicators have economists thinking the economy has signs of life. “Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.2 percent rate after expanding at a 3.6 percent pace in the second quarter,” Reuters reported. For example, Market Watch said Americans are spending more on new vehicles, indicating some confidence in the economy. Furthermore, the dollar remains strong and inflation is low. The reason why GDP underperformed was because large companies paused in creating products to export. It could indicate a slowdown of the wider economy, as Americans get up on their feet, but the world out there contains unrest.
No word yet on how the Federal Reserve will take the news. This week, it decided once again not to raise interest rates, pushing off that decision until December. “Chair Janet Yellen and other members keep saying that it will soon be time to move, but each time as the date approaches they find another reason not to move,” The Wall Street Journal opined. “Perhaps they’re afraid of taking responsibility for the consequences of raising rates if the economy turns south. At least if they stay at zero the Fed won’t be blamed for having done nothing.”
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