Economy in U.S. Expands at a 2.8% Rate on Inventories
By Shobhana Chandra - Nov 7, 2013
Household purchases and business spending on equipment slowed in the third quarter, even as a buildup in inventories unexpectedly boosted the pace of economic growth in the U.S.
Gross domestic product rose at a 2.8 percent annualized rate after a 2.5 percent gain the prior three months, a Commerce Department report showed today in Washington. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. Consumer spending climbed at the slowest pace since 2011 and corporate investment was the weakest in a year.
The biggest gain in inventories since the beginning of 2012 risks holding back production and the economy in the current quarter, which was restrained by a 16-day partial shutdown of the federal government. Jobs data tomorrow are projected to show hiring slowed in October, helping explain why Federal Reserve policy makers are pressing on with stimulus.
“You’ve got this big jump in inventories, and that’s clearly in excess of what the flow of spending is,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “If you stockpile all this inventory but your sales don’t really change all that much, then what you’re going to do in the next quarter is cut back your orders, cut back production.”
Estimates of the 87 economists surveyed for third-quarter GDP, the value of all goods and services produced, ranged from 1.2 percent to 3 percent. The data, initially slated for release on Oct. 30, were delayed by the government shutdown.
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http://www.bloomberg.com/news/2013-11-07/economy-in-u-s-expands-at-a-2-8-rate-as-inventories-climb.html
