US economic growth rate quickens

The US economy grew at an annualized rate of 2% in the July-to-September period, acceleration on the previous quarter, official figures have shown. The expansion came despite continuing high unemployment and weakness in the housing market. The 2% figure is an improvement on the upwardly revised 1.7% increase between April and June, but less than the 3.7% growth recorded from January to March. The Federal Reserve suggested last week it would do more to boost the economy. To do this, the Fed – the US central bank – is expected to announce next month that it will resume quantitative easing – injecting fresh money into the economy through the purchase of government bonds. Compared with the preceding quarter, the US economy grew by 0.5% between July and September. The economy is continuing to experience a slow recovery by historical standards, with the unemployment rate at 9.6% and Americans increasingly nervous about the future.

This is expected to manifest itself in big losses for President Barack Obama’s Democratic Party in congressional elections, which are being seen as a vote on his economic performance. The Commerce Department’s figures showed that businesses building up their inventories – stocks of goods and materials – contributed most of the US economic expansion during the third quarter. The growth in business inventories made up more than two-thirds of the 2% annualized expansion in the economy. However, consumer spending also increased, despite continuing high US unemployment. Consumer spending rose 2.6% during the third quarter, up from 2.2% in the second. Scott Brown, chief economist at Raymond James & Associates said that Economic growth is still positive, but a bit disappointing. It’s not where we would like it to be at this point of the recovery.