U.S. Economic Growth Improves to 2% Rate in Q3

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quality control at Raleigh Denim Workshop and CuratoryBy CHRISTOPHER S. RUGABER

WASHINGTON (AP) - The U.S. economy grew at a slightly faster 2 percent annual rate from July through September, buoyed by more spending by consumers and the federal government.

Growth accelerated from the 1.3 percent rate in the April-June quarter, the Commerce Department said Friday.

The report is the last snapshot of economic growth before Americans choose a president in 11 days.

The pickup in growth could lend weight to President Barack Obama's message that the economy is improving. Still, growth remains too weak to rapidly boost hiring.

And the 1.74 percent annual growth rate for the first nine months of 2012 trails last year's 1.8 percent growth - a point that Republican nominee Mitt Romney might emphasize.

The economy grew faster last quarter because consumer spending rose at a 2 percent annual rate, up from a 1.5 percent rate in the second quarter. Spending on homebuilding and renovations increased at an annual rate of more than 14 percent. And federal spending surged, mainly because of the sharpest increase in defense spending in more than three years.

Growth was held back by the first drop in exports in more than three years and flat business investment in equipment and software.

The economy was also slowed by the severe drought last summer in the Midwest. The drought cut agriculture stockpiles and reduced growth by nearly a half-point.

The government's report covers gross domestic product. GDP measures the nation's total output of goods and services - from restaurant meals and haircuts to airplanes, appliances and highways.

It was the government's first of three estimates of growth for the July-September quarter. And it sketched a picture that's been familiar all year: The economy is growing at a tepid rate, slowed by high unemployment and corporate anxiety over an unresolved budget crisis and a slowing global economy.

While growth remains modest, the factors supporting the economy have changed. Exports and business investment drove growth for most of the recovery, but are now fading. Meanwhile, consumer spending has ticked up. And housing is adding to growth after a six-year slump.

Consumer spending drives nearly 70 percent of economic activity.

Businesses have grown more cautious since spring, in part because customer demand has remained modest and exports have declined as the global economy has slowed.

Many companies worry that their overseas sales could dampen further if recession spreads throughout Europe and growth slows further in China, India and other developing countries. Businesses also fear the tax increases and government spending cuts that will kick in next year if Congress doesn't reach a budget deal.

Since the recovery from the Great Recession began in June 2009, the U.S. economy has grown at the slowest rate of any recovery in the post-World War II period. And economists think growth will remain sluggish at least through the first half of 2013.

Some analysts believe the economy will start to pick up in the second half of next year.

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9 Comments

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tj1108

Benghazi attack happened because of weapons that were not supposed to have been given out. It was a CIA operation that the ambassador was involved in. If your not watching Fox or reading it on their website you will stay ignorant of the facts about what our lying adiministration has been up to. My guess is someone at the state dept is releasing emails and info to the news ogranizations but only Fox is covering it.

October 29 2012 at 8:55 AM Report abuse rate up rate down Reply
ha6ai

More extreme-left AP Obama propaganda.

No improvement!

Almost all of it is Obama hiring! The Federal Government can't hire its way out of Obama''s Depression.

Nothing is "improving".

Because of Obama we are about to go over a fiscal cliff, with a massive Obama tax-hike, and a disastrous Obama-sequester. (Obama is the one who came up with the absurd "Sequester" plan.

He will punish the entire economy and the Middle Class in order to raise taxes on the job producers.

October 28 2012 at 1:17 AM Report abuse +1 rate up rate down Reply
tj1108

Hey, MORON vote. 2% is not even half of what was expected 3 yrs ago. The 23million who are out of work it appears will finnaly get a job in 2020 and those who enter the workforce beytween now and then can get inline for a job by 2030. Whats so sad is this is so fixable.

October 27 2012 at 9:01 AM Report abuse rate up rate down Reply
freethedems2012

Nobody believes the liberal media anymore. Well, I guess the brain dead liberals do.

October 26 2012 at 4:35 PM Report abuse -1 rate up rate down Reply
dus48

is this a joke?

October 26 2012 at 2:08 PM Report abuse +1 rate up rate down Reply
kgmfl

You guys writing this must have gotten into O's stash (weed) that Maher said his contribution money went to. This is a horrible report. Increase due in part to huge gov't spending! 2% growth (pitiful) lower than last year, and you sound the horns! . I will guarantee that this number will be readjusted at some point way down as the lasts reports have been. Probably won't see that report.
You guys have to be joking, since I did not see a contribute to Obama tab in the story.

October 26 2012 at 12:55 PM Report abuse rate up rate down Reply
.kowalski440mag

Multiply this figure times 2(normal rate for 3rd yr of recovery) and you can say 'smooth sailing!'

October 26 2012 at 12:52 PM Report abuse rate up rate down Reply
dus48

amazing that everything seems to be suddenly uplifting news.in fact everyday we are getting such positive news.is this all a precurser for all the real numbers to be out in couple of weeks.ecven the so called embassy attack hearing will held the third week of november.so than after the elections are over we will finally get the facts.not that it would make any difference to the families who lost their dear ones.they were not given the protection.its simple as that.no matter how they spin it.there was no leadership period.

October 26 2012 at 11:46 AM Report abuse rate up rate down Reply
jdykbpl45

You call this an improvement?

October 26 2012 at 11:10 AM Report abuse -4 rate up rate down Reply
3 replies to jdykbpl45's comment