WASHINGTON (AP) — The U.S. economy grew at a slightly faster 2 percent annual rate from July through September, buoyed by more spending by consumers and the federal government.
Growth accelerated from the 1.3 percent rate in the April-June quarter, the Commerce Department said today. 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 economy 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.
And federal spending surged, mainly because of the sharpest increase in defense spending in more than three years.
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.