Economic growth rate edges up
WASHINGTON (Reuters) - A pickup in consumer spending and strong exports powered economic growth ahead at its fastest rate during the third quarter since the beginning of 2006, according to a government report on Wednesday.
Gross domestic product that measures total production within U.S. borders unexpectedly edged higher to a 3.9 percent annual rate, up from 3.8 percent in the second quarter for the strongest quarterly growth since 4.8 percent in the first quarter of 2006, the Commerce Department reported.
Economists surveyed by Reuters had forecast that third-quarter growth would slow to 3 percent partly in expectation that dispirited consumers hurt by falling house prices would trim their spending. Surveys have shown that consumer confidence has suffered as a subprime mortgage crisis lingers on.
Instead, consumer spending picked up to a 3 percent annual rate during the third quarter from 1.4 percent in the second quarter, a powerful stimulant since consumers fuel about two-thirds of national economic activity through their purchases of goods and services. Exports jumped at a 16.2 percent rate, more than double the second quarter's 7.5 percent -- the strongest increase since the fourth quarter of 2003.
The GDP data is one of the final gauges of economic performance that policy-making members of the Federal Open Market Committee will weigh before announcing later on Wednesday whether they will reduce interest rates. The Fed is expected to trim its key federal funds rate a quarter percentage point but the strong GDP report may create some uncertainty in financial markets whether the extra tonic is needed.
