Growth accelerated from the 1.3 percent rate in the April-June quarter, the Commerce Department said Friday. Even with the increase, growth remains too weak to rapidly boost hiring.
“Growth came in a little higher than we had feared, largely because of the big jump in federal spending,” said Paul Ashworth, chief U.S. economist at Capital Economics. “But the economy is still not growing rapidly enough to create sufficient jobs to reduce the unemployment rate.”
The report is the last snapshot of the economy before Americans choose a president in 11 days. The 1.74 percent annual growth rate for the first nine months of 2012 remains slightly behind last year’s 1.8 percent growth.
Federal spending surged, mainly because of the sharpest increase in defense spending in more than three years.
The economy also grew faster last quarter in part because consumer spending rose at a 2 percent annual rate, up from a 1.5 percent rate in the second quarter. Spending on homebuilding and renovations increased at an annual rate of more than 14 percent.
Growth was held back by the first drop in exports in more than three years and flat business investment in equipment and software.
The economy was also slowed by the effects of the severe drought that struck last summer in the Midwest. The drought cut agriculture stockpiles and reduced the annual growth rate by nearly a half-point. Once crop supplies return to normal, they will help boost economic growth, analysts noted.
The government’s report covers gross domestic product. GDP measures the nation’s total output of goods and services – from restaurant meals and haircuts to airplanes, appliances and highways.
It was the government’s first of three estimates of growth for the July-September quarter. And it sketched a picture that’s been familiar all year: The economy is growing at a tepid rate, slowed by high unemployment and corporate anxiety over an unresolved budget crisis and a slowing global economy.
— This article appeared on page B1 of the Albuquerque Journal