U.S. Economic Growth Exceeds Third Quarter Predictions
This surprise came right after the government shutdown, during which economists thought economic growth would decrease anywhere between 0.25% and 0.5%. Inventory investments and a narrowing trade deficit were main contributors to the increased economic growth.
“I was a little surprised by the overall number, which was higher than expected, but most of that is traceable to the gain in inventories,” said Douglas P. Handler, chief United States economist at IHS. “We are still looking at some serious issues in the fourth quarter.”
Growth had been expected to gain speed in the fourth quarter as the drag from fiscal policy lifted. Economists estimate the government shutdown last month will shave as much as 0.6 percentage point from GDP. However, despite this change, many economists still predict that unemployment will rise above the current 7.2%, because of government furloughs.
Read more about the U.S. economic situation here.
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