Economic growth in the United States was better than the estimate for the third quarter and it was due to the increase in consumer spending, homebuilding and defense outlays. The gross domestic product, which is the value of all goods and services produced, increased at a 2 percent annual rate compared to 1.3 percent in the previous quarter. This is according to the Commerce Department numbers released today. The average estimated made by 86 economists polled by Bloomberg was 1.8 percent increase.
Consumer confidence reached a five year high in October. It suggested that the increase in spending can be sustained as booming real-estate improves household finances. The White House used the GDP report to promote measure that would strengthen the economy more. The measure includes hiring more teachers. Mitt Romney said that the GDP was a sign that President Barack Obama’s policies have failed.
Most of the stocks dropped, which extended the weekly decline of the Standard & Poor’s 500-Stock Index. The S&P 500 dropped 0.1 percent to 1,411.94 as it closed in New York. The index is currently down 2 percent in October. The Treasury securities increased. It sent the yield on the benchmark 10 year note to 1.75 percent from 1.82 percent the previous day.
The Thomson Reuters/University of Michigan final consumer sentiment index showed an increased to 82.6 in October, which is the highest level since September 2007. The reading in September was 78.3. The average forecast of 60 economists polled by Bloomberg was 83 while the preliminary reading was 83.1 made earlier this month.
The estimates for the GDP ranged from 0.9 to 3.1 percent. The GDP estimate is the first for the current quarter, with other releases scheduled for November and December.
Consumer purchases went up at 2 percent annual rate from 1.5 percent in the second quarter. Purchases added 1.4 percentage points to the growth.