Real growth in the US economy was revised upward in the third quarter, showing that the economy continues to chug along at a respectable rate despite earlier fears of a slowdown in August and September.
Real GDP for the July-September period grew at an annual rate of 2.1 percent, the Commerce Department reported Tuesday, up from its initial estimate of 1.5 percent and in line with economists expectations. The revision came as new data showed that reductions in inventory were less drastic than originally reported.
The solid if unspectacular uptick contrasts with the mixed signals coming from Europe. The German economy grew a seasonally adjusted 0.3 percent in the third quarter, putting it on pace to grow 1.8 percent for the year, while France's economy started growing again in Q3 with an 0.3 percent rise in Q3 and official projects of 1.1 percent growth for the year. But smaller eurozone countries fared worse, with Portugal stagnating after a 0.5 percent increase during the second quarter and Finland contracting 0.6 percent.
“We now expect that the U.S. economy will reach full employment within the next 12 months — the ‘tortoise recovery’ looks to be approaching the finishing line,” Goldman Sachs chief economist Jan Hatzius wrote in a recent note.
US consumer spending grew at a respectable 3 percent annual rate. Business investment was revised up to 2.4 percent growth. Notably, home construction had a large increase of 7.3 percent.
US trade dragged, as exports increased only 0.9 percent and imports increased 2.1 percent.
Many analysts expect the economy to pick up a bit in Q4. On Tuesday, Barclays Research revised up its estimate for the quarter to an annualized 2.4 percent rate, up from 2.3 percent, with a narrowing of trade deficit figures.
A survey released Tuesday from the Munich-based Ifo Institute showed positive growth in the business climate index in Germany, reaching 109.0 in November. Data from the Insee statistics agency shows France had a favorable short-term economic outlook.
The Ifo survey found the Nov. 13 Paris terror attacks had no effect on the German economy. The majority of the Insee polls were done prior to the attacks.