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U.S. economy shows modest growth

Oct. 26, 2012 at 12:11 PM   |   Comments

WASHINGTON, Oct. 26 (UPI) -- The U.S. Commerce Department estimated U.S. economic growth at 2 percent in the third quarter, up from 1.3 percent in the second.

The report, in a department release Friday, is considered an "advanced" estimate, subject to future revisions for the third quarter.

The 1.3 percent annual growth rate for the second quarter is considered a final figure.

The economic forecast was close. Economists had predicted third-quarter growth of 1.9 percent.

The Commerce Department said production of motor vehicles subtracted 0.47 percentage points from the GDP in the third quarter while computer sales added 0.17 percentage points.

Consumer spending rose 2 percent over the second quarter after going up 1.5 percent from the first quarter to the second.

Durable goods added to growth, with production increasing 8.5 percent after a drop of 0.2 percent in the previous quarter. Non-durable goods rose 2.4 percent after rising 0.6 percent in the previous quarter.

Fixed business investments dropped 1.3 percent after rising 3.6 percent in the previous three months.

Commercial buildings investment dropped 4.4 percent while business spending on software and computers dropped less than 0.1 percent.

Residential fixed investment rose 14.4 percent after increasing 8.5 percent in the second quarter.

Exports of goods fell 1.6 percent while imports dropped 0.2 percent. A rising imports has a negative effect on the GDP.

The numbers show the U.S. economic recovery shifting focus. What was a manufacturing-driven recovery looks more like a recovery in consumer spending, with a stronger housing market.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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