Ahead of the Bell: US economy-GDP
WASHINGTON (AP) — The U.S. economy likely grew a tiny bit faster in the July-September quarter than previously estimated, but the pickup isn't expected to last.
Economists think the government will revise its estimate of growth for the third quarter to a 2.8 percent annual rate, slightly better than the 2.7 percent rate it estimated a month ago. The Commerce Department will release the report at 8:30 a.m. EST Thursday.
In its previous estimate, the government revised up gross domestic product from an initial 2 percent annual growth rate to 2.7 percent. GDP measures the nation's total output of goods and services — from restaurant meals and haircuts to airplanes and appliances.
The source of that upgrade was faster restocking by businesses. That might end up slowing growth in the October-December quarter if less consumer and business spending prompts businesses to cut back on restocking.
Many economists think growth in the current October-December quarter has slowed to an annual rate of around 1.5 percent. And they aren't expecting much improvement in the January-March quarter. The latest forecast from 48 top economists for the National Association of Business Economics is for first-quarter growth of just 1.8 percent.
GDP growth at that level is considered too weak to significantly lower the unemployment rate, which was 7.7 percent in November.
Economists cite two key reasons for the expected weakness in consumer and business spending this quarter. Superstorm Sandy halted business activity along the East Coast in late October and November. And spending has likely slowed in the final weeks of 2012 as lawmakers and President Barack Obama struggle to reach a budget deal to avoid the "fiscal cliff." That refers to the tax increases and spending cuts that would occur in January without a deal.
But if Congress and the White House reach agreement to avoid the fiscal cliff, economic growth could accelerate next year, many economists, including Federal Reserve Chairman Ben Bernanke, have said.
The Fed last week said it plans to keep a key interest rate at a record low as long as unemployment remains above 6.5 percent. And it forecast that unemployment would stay that high until late 2015.
The NABE forecasting panel said it expected GDP to grow 2.1 percent in 2013, little changed from expected 2.2 percent expansion this year. That would continue the tepid growth that has persisted since the official end of the Great Recession in mid-2009.
But the NABE panel said it thinks growth will accelerate later in the year as long as Congress and the administration resolve their debate over taxes and government spending. Doing so would remove the uncertainty that, in part, is holding back spending, many economists say.