Economic growth likely back to ho-hum pace in Q4
If you were hoping the third quarter’s acceleration in economic growth augured a sustained pickup, next Friday’s report on the economy’s performance the fourth quarter is likely to curb your enthusiasm.
Experts reckon growth returned to the modest 2% pace marking the 7-1/2-year-old recovery. And that's not a bad thing.
The economy grew at a 3.5% annual rate in the third quarter, a two-year high, following nine months of meager 1% gains. Consumer spending, which makes up 70% of economic activity, fueled the increase, with households benefiting from steady job and income growth, reduced debt and cheap gas. And business investment, which had been plagued by the oil slump and global weakness, began a modest comeback.
Economists: Growth will pick up next year
But some of the advance was chalked up to pent-up demand. Firms had cut back on stockpiling, and finally replenished shelves. And exports surged 10.1%, but that was due to a spike in soybean shipments following a poor harvest in South America.
In the fourth quarter, consumption likely moderated but still posted solid 2.5% growth, Barclays economist Michael Gapen says. And while business spending and stockpiling grew, exports likely fell sharply.
Yet 2% growth would still outpace other advanced economies. And economists surveyed by Blue Chip Economic Indicators look for 2.3% growth in 2017, partly because of President Donald Trump's fiscal stimulus plan.