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US economy expands at 4.1 percent rate in third quarter, fastest pace since late 2011

WASHINGTON (Reuters) - The U.S. economy grew at its fastest pace in almost two years in the third quarter while business spending was stronger than previously estimated, pointing to some underlying strength that should be sustained.

Gross domestic product grew at a 4.1 percent annual rate instead of the 3.6 percent pace reported earlier this month, the Commerce Department said in its third estimate on Friday.

That was the quickest pace since the fourth quarter of 2011 and beat economists' expectations for an unrevised 3.6 percent rate. The economy grew at a 2.5 percent pace in the April-June quarter.

Business spending increased at a 4.8 percent rate instead of the 3.5 percent pace reported early this month. That reflected stronger growth in intellectual property products than previously reported.

There were also revisions to consumption. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised up 0.6 percentage point to a 2.0 percent rate. The revisions reflected higher spending on both goods and services than previously estimated.

Revisions to spending on gasoline and other energy goods accounted for part of the upward revision to spending on goods, while spending on healthcare and other services also was higher than previously estimated.

Consumer spending grew at a 1.8 percent rate in the second quarter.

Business spending on equipment was revised up to a 0.2 percent pace. It had previously been reported as being flat.

That left domestic demand rising at a 2.3 percent rate, instead of the 1.8 percent pace the government reported earlier this month.

Export growth was also raised up by two tenths of a percentage point to a 3.9 percent pace.

Spending on residential construction was lowered by 2.7 percentage points to a 10.3 percent rate in the third quarter.

A large build-up of stocks still accounted for much of the increase in GDP growth in the July-September quarter. That has left economists anticipating a sharp slowdown in the pace of inventory accumulation, which would hurt fourth-quarter growth.

Businesses accumulated $115.7 billion worth of inventories. That compared to prior estimates of $116.5 billion.

So far there is little sign that businesses are pulling back, with stocks at retailers, auto dealerships and wholesalers increasing solidly in October.

Some economists say the inventory drag on GDP could be delayed until the first quarter of 2014, while others believe the third-quarter stock pile-up was probably planned.

An inventory drag in the first three months of 2014 is likely to be offset by some loosening of fiscal policy.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Third Quarter U.S. GDP Growth Raises to 4.1 Percent

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cpsilva19 December 20 2013 at 9:40 AM

Denial, denial everywhere

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JTTW December 20 2013 at 9:46 AM

REALLY? Pfffffffffffft . enough said

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jp7867 December 20 2013 at 10:07 AM

Isn't it wonderful what revisions can do.

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stevemckevitt December 20 2013 at 10:48 AM

And what about production? ... Except for selling off more of our non-renewable resources. What about production of goods?

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jj2301 December 20 2013 at 12:01 PM

2011 isn't exactly a high-water mark, from an economic expansion perspective. I think they call this "Lying with statistics".

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1 reply
PHILL AND TRISHA jj2301 December 20 2013 at 12:39 PM

how about those from 2007??...want to tell us all about then?/..keep in mind..while your lying...most of us lived it!...

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1 reply
jj2301 PHILL AND TRISHA December 20 2013 at 1:08 PM

As we both know, the economy went off a cliff, catalyzed by banks' unregulated trading of derivatives, something prohibited by the Glass Steagal Act that was gutted by Bill Clinton. But hey, why bother with the root cause when you can demagogue, right?

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lacabrera December 20 2013 at 12:07 PM

Fuzzy Obama math ,maybe ?

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2 replies
davidcpasq lacabrera December 20 2013 at 12:19 PM

most likely

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PHILL AND TRISHA lacabrera December 20 2013 at 12:38 PM

nope..."reaganomics"..the same crappola you right wing looneys use daily!...its no wonder you cant pass a simple math test!

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jimdavis11a December 20 2013 at 1:02 PM

Avg GDP growth 1945 to 1981 = 3.79%
Avg GDP growth 1982 to 2013 = 2.76%
Any questions?

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scarrig December 20 2013 at 2:59 PM

My Fellow Citizens, Please Read This Carefully:

No, the U.S. economy most certainly DID NOT expand at a 4.1% p.a. rate July-September. We certainly spent more dollars – all The Government’s economic measures are, and deceptively so, denominated in $s – but we did NOT produce and consume 4.1% p.a. more STUFF in the 3rd quarter. That much, We, The People, do know.

AOL/Reuters "economists" yet again failed to acknowledge that an increase in total $ expenditures does NOT necessarily indicate any increase whatsoever in our consumption of STUFF. In fact, the exact opposite more often is true in today’s America.

This is because it is much quicker and easier to print $s than it is to produce STUFF. It’s more politically expedient for The Government (BOTH parties do it, incidentally) to change the value of the $ – and steal through deception – than it is to honestly and openly tax We, The People, outright.

We buy and consume STUFF; we do not buy and consume CURRENCY. $s are the vehicle to transfer ownership of STUFF. Alone, $s are, literally, worth no more than the paper on which they are printed.

To put it simply: if you have 10 widgets in an economy with $10 dollars available to effect exchange, the price per widget is $1, each. If government, through “providing sufficient liquidity for a growing economy” or “Quantitative Easing,” “prints” another $90 out of thin air, what happens to the price of widgets? Right!! It goes up.

After the money has worked its way through our ten-widget economy, the widgets’ price quickly becomes $10, each. $100 in currency “printed” by The Government, divided by the 10 widgets produced by We, The People = a $10 per widget price. It’s no more complicated – in the short run – than that. There are no more widgets; they just cost ten times as much, each.

Now, why The Government prints the additional $90 and to whom it gives that money, and why, we’ll leave for next time.

For now, suffice it to note that those of us selected by The Government to first spend the additional $90 on widgets will get them at the old, $1/widget price. The rest of us, further (physically and in time) down The-Government’s-largesse-dispensation line will have to pay incrementally more per widget, of course.

This will not be because We, The People, value widgets any more. It will be because The Government – by devaluing existing currency through INFLATION of the money supply – has effected a transfer of purchasing power by making the dollar worth less!

By just “printing” money into existence, The Government transfers real wealth from abroad to the U.S., from savers to borrowers, from the future to the present, and from The People to The Government. It’s no more complicated than that.

Please, join with me (scarrig@aol.com) in getting this message across to the “economists” who are, directly or indirectly, in The Government’s employ; or, ignorant. Let us pray it's just the latter.

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jimdavis11a December 20 2013 at 1:13 PM

Supply side economic theory: "Production and the willingness to produce goods and services is the key to economic prosperity. Consumption or demand is of secondary consequence"
SAY WHAT?????????????????

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jimdavis11a December 20 2013 at 1:24 PM

It's not really a Democrat vs GOP issue because as long as politicians, from both parties, depend on huge campaign finance contributions to finance their campaigns we the people are going to get the shaft! Big business runs this country because big business has the money!

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