Third quarter economic growth in US comes in ahead of expectations

Friday 26 October 2012 14.16
A rise in spending at shops such as Abercrombie has boosted US GDP
A rise in spending at shops such as Abercrombie has boosted US GDP

The US economy grew by 2% over the third quarter of the year, a faster-than-expected rate of expansion.

Gross domestic product expanded at a 2% annual rate, the American Commerce Department said, accelerating from the second quarter's 1.3% pace.

A growth rate in excess of 2.5% is needed over several quarters to make substantial headway cutting the jobless rate.

Economists polled by financial newswire Reuters had expected a 1.9% growth pace in the third quarter.

The report comes a little more than a week before the election in which President Barack Obama is trying to fend off Republican challenger Mitt Romney.

Since climbing out of the 2007-09 recession, the US economy has faced a series of headwinds from high fuel prices to the debt turmoil in Europe and, lately, fears of US government austerity.
It has struggled to exceed a 2% growth pace and remains about 4.5 million jobs short of where it stood when the downturn started.

Consumers, however, largely shrugged off the impending sharp cuts in government spending and higher taxes, which are due at the start of the year absent congressional action.

Indeed, they went on a bit of a shopping spree as the quarter wound down, buying a range of goods - including cars and Apple's iPhone 5.

Consumer spending, which accounts for about 70% of US economic activity, grew at a 2% rate after increasing 1.5% in the prior period.

Keywords: us gdp figures