For the first time in a year, the United States economy grew, the Commerce Department said on Thursday. But even if a recovery is technically in the offing, job seekers likely will not begin to feel the benefits for months to come.þþGross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the second and first quarters of this year, respectively. þþRobust government spending, exports, consumer spending — buoyed by auto purchases Congress’s now-expired cash-for-clunkers program — and housing helped finally push the measure into positive territory. Spending on consumer durable goods like cars shot up an astounding 22.3 percent at an annual rate, compared to a decrease of 23.3 percent the previous quarter.þþThe economic growth came without a major surge in inflation. The price index for gross domestic purchases, which measures prices paid by United States consumers, increased 1.6 percent in the third quarter, compared with an increase of 0.5 percent in the second, the department said. Excluding food and energy prices, the inflation index rose 0.5 percent in the third quarter, compared with an increase of 0.8 percent in the second.þþThursday’s report will likely provide ammunition to both advocates and opponents of additional federal spending to stimulate certain parts of the economy, as mutually reinforcing pessimism among consumers and employers continues to fester.þþOn the one hand, the poor job market is discouraging Americans from increasing their spending by too much. Consumer spending on nondurable goods like food and clothing, for example, increased just 2 percent in the third quarter of this year.þþAnd likewise, stagnant consumer demand and withering consumer confidence have left companies wary of hiring more employees — or, for that matter, taking any expensive risks. The jobless rate reached 9.8 percent in September, its highest rate in 26 years. According to Thursday’s report, business investment in structures fell at an annual rate of 9 percent in the third quarter.þþSuch forces may pressure Washington to look for targeted interventions into the labor market, in addition to last winter’s broader $787 billion stimulus package, which continues to work its way through the economy. Proposals on the table include another extension in unemployment benefits and various job creation programs.þþInventory rebuilding is one bright spot in Thursday’s report, as it indicates businesses may rev up activity in the coming months to replenish stockroom shelves.þþ“Everybody had been dealing with a just-in-time status quo,” said Sandra Westlund-Deenihan, president and design engineer for Quality Float Works Incorporated, a plant in Schaumburg, Ill., that manufactures metal float balls and valve assemblies. “They were living off inventories they’d built up over the last several years. Now they’ve drawn that down and reached a point where they may have to have it ready and back on the shelf again.”þþLike many American manufacturers, Ms. Westlund-Deenihan says international business has helped keep her company afloat. United States exports overall grew at an annual rate of 14.7 percent in the third quarter. þþ“The exports have helped fill in the gap,” she said. “The weakened dollar has really helped us.”þþStock futures rose on the news.þ
Source: NY Times
