The nation’s economy continued to expand in the third quarter, rising at a better-than-expected annualized rate of 2 percent, the Commerce Department said this morning.
The Gross Domestic Product numbers are preliminary and will be adjusted but economists had expected a rate of 1.8 percent for the period. GDP rose at a 1.3 percent rate in the second quarter. It’s the first back-to-back quarters 2 percent or lower since the U.S. began emerging from recession in 2009.
“Strong GDP growth in the second half of this year is important given the pending government spending cuts in 2013 and the continued need for new job creation. Unemployment figures remain relatively high, at 7.8 percent, and private company sales growth has slowed in 2012 from 2011, indicating that there are still mixed signals for the health of the U.S. economy,” said Brian Hamilton, CEO of Sageworks and an expert on privately held companies.
Growth has been sporadic since the recession officially ended in 2009, mostly hovering at the 2-3 percent level, not enough, say economists, to bring down joblessness to where it was before the economic meltdown took full hold in 2007-2008. After 43 straight months above 8 percent, unemployment dropped to 7.8 percent last month.
The signs for the economy are mostly going in the right direction. Housing is recovering, with new home sales up 27 percent last month from a year earlier and existing home sales at their best rate since the 2008. Consumer purchases rose at a 2 percent annual rate, from 1.5 percent in the previous quarter, led by the best car sales since 2008.
But businesses are cutting back again over worries about the debt crisis in Europe and the looming “fiscal cliff” in the US. Come Jan. 1, unless steps are taken by Congress and the president, automatic budget cuts are set to take place and tax cuts, as well as a temporary cut in the payroll tax, will expire creating a new drag on the economy.