US economy slows to 1.5% growth in third quarter

The reading came in slightly weaker than analysts expected, but the economy was widely expected to have cooled down from the second quarter’s robust 3.9% expansion.

In a few negative news for the U.S. economy, it was reported today that the United States economy slowed sharply over the summer reflecting a cutback in businesses’ stockpiling of goods which offset the strength seen in consumer spending. This could get revised in the third estimate, which uses the quarterly services survey data to measure this component. Gasoline prices have stabilized, employment gains have slowed and hourly wages still haven’t taken off.

Exports rose 1.9%, compared to the 5.1% increase in the second quarter.

Frankly, you can spin these GDP figures either way. “However, with the domestic economy continuing to improve, this still argues for growth in GDP to rebound in the fourth quarter, with our current forecast assuming a 2.9% increase in the quarter”.

“Personal consumption continued to grow at a solid pace”, said Jason Furman, chair of President Barack Obama’s Council of Economic Advisors.

Most economists think growth has been strengthening since the July-September quarter ended.

After-tax incomes adjusted for inflation climbed at a 3.5% annual rate, nearly three times the 1.2% gain in the prior three months. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use. “Net worldwide trade is unlikely to provide much support in the near-term given a few uncertainty about external demand growth and a stronger USA dollar”.

The GDP report comes on the heels of the U.S. Federal Reserve’s two-day policy meeting, in which the Federal Open Market Committee chose to leave interest rates near zero for the 83rd straight month.

Despite holding interest rates at its latest meeting, the US Federal Reserve yesterday suggested a rate hike remains on the cards at its next meeting, to be held on 15-16 December.

Cheap oil is impairing the performance of the U.S. energy companies, at the moment spending more than they earn and trying to fix the situation to not much avail so far.

Cracks are emerging in the USA economy as economic growth dipped in the third quarter report released Thursday, marking slower growth than 2014 and renewing fears that the seven year recovery is faltering.

The economy has struggled to sustain a faster pace of growth since the end of the 2007-2009 recession, with average yearly growth failing to break above 2.5 percent. The Wall Street Journal reports that a reduction in private inventories was a big influence in the decline, signaling a lack of business confidence in future consumer demand. Homebuilding also grew at above 6 percent, even after slowing from double-digit growth earlier in the year.