The US economy now appears to have grown at its strongest rate in 2 years during Q-3, rebounding from a steep downturn that began in December 2007, according to survey of top economists released Saturday. Private economists polled October 5-6 for the Blue Chip Economic Indicators October survey said gross domestic product grew at an annualized rate of 3.2% in the Q, up 0.2 percentage point from what they estimated a month earlier. GDP shrank in Q-2 at a 0.7% annual rate. Q-3 growth was fired by a rebound in personal consumption expenditures, the first increase in residential investment since the final quarter of 2005, and a reduced rate of business inventory reduction, the survey said.
The projected Q-3 growth would be the strongest since a 3.6% annual rate of GDP increase in Q-3 of 2007, according to Commerce Department figures.
A forecast for a 2.4% growth rate in Q-4 was unchanged from last month mostly due to economists’ belief that the ‘cash for clunkers’ incentive program, which expired in August, pulled demand for vehicles forward into the third quarter, the survey showed.
For the whole of Y 2009, Blue Chip forecasts the economy will shrink 2.5%, slightly below the 2.6% contraction forecast in September. In 2010 it will likely expand at a 2.5% pace, up from 2.4%seen last month.
Jobs will continue to be lost through at least the end of this year and the unemployment rate will likely average 10% over the next 3 Quarters, receding only modestly from that level in the second half of 2010, the survey showed.
The panelists expect the workweek will lengthen and employment will begin growing again in the first half of 2010, lifting the pace of growth in personal income and consumer spending. Paul A. Ebeling, Jnr. www.livetradingnews.com
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