Washington – The nation’s economy demonstrated just how sturdy it is, posting its strongest quarterly showing in more than a year despite the Gulf Coast hurricanes.
Gross domestic product, the best measure of economic standing, increased at a hardy 4.3 percent annual rate from July through September, the Commerce Department reported Wednesday.
The reading was even better than the 3.8 percent pace estimated a month ago for the third quarter, and it exceeded analysts’ projections of a 4 percent pace. GDP measures the value of all goods and services produced within the U.S.
The upgraded performance reflected brisk spending by consumers and businesses, despite record energy prices, and stronger investment in homebuilding.
“The economy shrugged off the ill effects of the hurricanes very gracefully,” said Mark Zandi, chief economist at Moody’s Economy.com.
The hurricanes did bite into economic activity, especially when it came to jobs. Zandi and other economists believe economic growth probably would have topped 5 percent if the hurricanes had bypassed the United States.
Nonetheless, the GDP’s growth during the third quarter was the strongest since the first three months of 2004. Also, it showed that the economy gained considerable momentum from the 3.3 percent pace in this year’s second quarter, the April-June period.
Separately, a Federal Reserve report suggested the economy had solid momentum in October and much of November.
Manufacturing, retail sales and hiring improved in many regions, the Fed said. Housing activity, while still healthy, slowed in many markets; demand for home mortgages eased in some areas.
The Fed’s observations added to other signs of a gradual cooling in the hot housing market.
Looking ahead, economists predict the economy will turn in a solid performance in the October-to-December quarter, even based on the assumption of consumers’ belt- tightening.
Economic-growth projections for the fourth quarter range from an annualized rate of more than 3 percent to 4 percent. A few analysts believe GDP growth could come in around 2 percent, a subpar performance.
In the third quarter, though, consumers and businesses did their part to keep the economy rolling.
Consumer spending grew at a 4.2 percent pace, the strongest since the final quarter of 2004. Economists predict consumer spending will slow considerably in the fourth quarter even if holiday sales are solid. Growth from other areas should help blunt that and allow the economy to log a good quarter, most economists said.
