Eco­nomic growth strong­est in 2 years

But economists say 2.9% rate likely won’t con­tinue

Baltimore Sun - - MARYLAND - By Martin Crutsinger

WASHINGTON — Don’t ex­pect much more from the U.S. econ­omy this year — it may have al­ready peaked.

Gross do­mes­tic prod­uct, the broad­est mea­sure of eco­nomic health, grew at an­nual rate of 2.9 per­cent in the July-Septem­ber quar­ter, shak­ing off a lack­lus­ter first half and ac­cel­er­at­ing to its strong­est growth in two years, the Com­merce De­part­ment re­ported Fri­day.

The im­prove­ment was pow­ered by a re­bound in ex­ports and a de­ci­sion by busi­nesses to re­stock their shelves.

The lat­est fig­ure was dou­ble the 1.4 per­cent rate in the sec­ond quar­ter. The de­tails, how­ever, point to signs that the pace is un­likely to last. Stocks slipped Fri­day de­spite the gov­ern­ment re­port­ing faster eco­nomic growth.

The rise in ex­ports was fu­eled by a surge in ship­ments of soy­beans to South Amer­ica. That’s prob­a­bly not go­ing to hap­pen again. The strength in in­ven­tory re­build­ing also looks likely to fade in com­ing quar­ters.

More­over, con­sumer spend­ing growth slowed from a break­neck pace in the sec­ond quar­ter. Busi- ness in­vest­ment was barely pos­i­tive, still try­ing to re­cover from sharp cut­backs in the en­ergy in­dus­try after oil prices plunged.

Home con­struc­tion also

Stocks dip

NEW YORK — Stocks ended slightly lower Fri­day, The Dow Jones in­dus­trial av­er­age fell 8.49 points, or less than 0.1 per­cent, at 18,161.19. The Stan­dard & Poor’s 500 in­dex gave up 6.63 points, or 0.3 per­cent, to 2,126.41. The Nasdaq com­pos­ite shed 25.87 points, or 0.5 per­cent, to 5,190.10. con­tracted for a sec­ond quar­ter, al­though economists be­lieve that set­back will be tem­po­rary.

Gre­gory Daco, head of U.S. Macroe­co­nomics at Ox­ford Eco­nomics, said the third-quar­ter re­sults “may be as good as it gets in 2016.”

He fore­casts slower growth of around 2 per­cent in the cur­rent October-De­cem­ber pe­riod.

“Go­ing for­ward, we ex­pect a mod­est ex­pan­sion in eco­nomic ac­tiv­ity, but we note the econ­omy may be in a fragile equi­lib­rium,” Daco wrote in a re­search note.

Still, the bet­ter-than-ex­pected GDP read­ing for the third quar­ter keeps the Fed­eral Re­serve on track to boost in­ter­est rates next month. Economists be­lieve a rate hike at next week’s meet­ing is un­likely so close to the U.S. pres­i­den­tial elec­tion.

The Com­merce De­part­ment re­port rep­re­sents one of the last ma­jor eco­nomic re­ports to be is­sued be­fore Amer­i­can vot­ers go to the polls on Nov. 8.

Democrats hailed the GDP re­bound after three straight quar­ters of ane­mic growth av­er­ag­ing around 1 per­cent. But Repub­li­cans said the new fig­ure did not change their view that the coun­try’s cur­rent poli­cies need to be changed.

“Growth hasn’t risen above 3 per­cent for a full year in any year of the Obama pres­i­dency,” said Dan Kowal­ski, deputy pol­icy direc­tor for the cam­paign of Don­ald Trump, the Repub­li­can pres­i­den­tial nom­i­nee.

MARY ALTAFFER/AP

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