WASHINGTON – The economy in the U.S. expanded in the third quarter at a faster pace than forecast, led by the biggest increase in inventories in more than a year as household purchases and business investment slowed.
Gross domestic product rose at a 2.8 percent annualized rate after a 2.5 percent gain the prior three months, a Commerce Department report showed today in Washington. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. Consumer spending climbed 1.5 percent, the smallest increase since 2011.
The biggest gain in inventories since the first three months of 2012 risks holding back production in the current quarter, which began with a 16-day partial shutdown of the federal government. Jobs data tomorrow are projected to show hiring slowed in October, helping explain why Federal Reserve policy makers are pressing on with stimulus.
“Growth is steady but not that great,” Jonathan Basile, an economist at Credit Suisse in New York, said before the report. “The shutdown will have a temporary effect on this quarter’s growth.”
Estimates of the 87 economists surveyed for third-quarter GDP, the value of all goods and services produced, ranged from 1.2 percent to 3 percent. The data, initially slated for release on Oct. 30, were delayed by the government shutdown.
Stock-index futures held gains as the European Central Bank lowered interest rates to fight a looming deflation risk. The contract on the Standard & Poor’s 500 Index expiring in December rose 0.4 percent to 1,773.2 at 8:34 a.m. in New York.
The GDP estimate is the first of three for the quarter, with the other releases scheduled for December when more information becomes available.
Another report showed first-time claims for jobless benefits fell by 9,000 to 336,000 last week, according to the Labor Department.