John on October 29, 2009 at 9:53 am
The U.S. economy grew in the third quarter for the first time in a year, beating market expectations, as consumer spending and new home-building rebounded, signaling the end of the worst recession in 70 years.
The Commerce Department, in its first estimate of third-quarter gross domestic product on Thursday, said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007, after contracting 0.7 percent in the April-June period.
The third-quarter recovery was generally broad-based, with solid gains in consumer spending, exports and home construction.
It was also driven by government programs like the popular discount on some new motor vehicle purchases, which stimulated auto sales and production, and a $8,000 tax credit for first-time home buyers.
The auto discount program ended in August and the home tax credit is due to expire next month. In the absence government support, there are fears that the sprouting economic recovery could falter, with rising unemployment also inflicting damage.
Given that actual unemployment is probably near 16-17%, I don’t see how this is sustainable. Consumers can’t shop or buy new homes if they don’t have jobs. Still, it’s a relief that the worst seems to be behind us.
Category: Energy & Economy |