Policy: Economy

Third-quarter economic growth sharply revised up to 3.6 percent

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Jobs,Labor,Debt Ceiling,PennAve,Joseph Lawler,Economy,Government Shutdown

The U.S. economy grew at a better-than-expected 3.6 annual rate in the third quarter, up from an initial reading of 2.8 percent, the Bureau of Economic Analysis announced Thursday. That beat analysts' expectations, which were for around 3 percent.

The report's headline result suggests that the economy was strengthening heading into October and the government shutdown and debt limit fights that paralyzed Washington.

Much of the upward revision to Thursday's report on the gross domestic product, however, came from an increase in business' inventories. Inventories usually are not predictive of future growth. The revisions also marked down U.S. exports. There were other hints of weakness as well, including the fact that consumption declined from the previous month. Gross domestic income, an alternative measure of economic growth that measures incomes rather than sales, grew only 1.4 percent on an annualized basis for the quarter, a much weaker result than for the GDP.

Separately, in another positive sign for the U.S. economy, the Labor Department reported Thursday morning that initial claims for unemployment fell for the last week of November to 298,000 from 316,000 the week before, a much better result than expected and a strong hint of gathering strength in labor markets.

Together, Thursday's reports indicate that October's job report, which showed resilience in U.S. labor markets with 204,000 jobs added, may not be an aberration but rather a mark of continued economic growth.

The November jobs report from the Bureau of Labor Statistics is due Friday morning. Analysts were anticipating the report to show 180,000 new jobs, but Thursday's numbers may set expectations even higher.

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