U.S. Economy Sees 2% Annual Growth In 3rd Quarter

(Newsroom America) -- Real gross domestic product increased at an annual rate of 2.0 percent in the third quarter of 2012, according to the "advance" estimate released by the Bureau of Economic Analysis.

The Conference Board Director for Macroeconomic Analysis, Kathy Bostjancic,said the third quarter figure showed U.S. economic growth is slow, but not slowing.

"It is difficult for the domestic economy to grow any more robustly, given the relatively soft pace of consumption and investment, weak sentiment among businesses, continued austerity for state and local government spending, weak exports, and the looming 'fiscal cliff,'" she said.

The negative headwinds from Europe and Asia also looked to be more persistent than previously thought, she said.

"On the plus side, housing is finally turning into a positive factor after a long decline. Nevertheless, the U.S. remains poised to at least partially fall off the "fiscal cliff," as politicians are likely to let the payroll tax cut and extended unemployment benefits expire at the end of this year.

"This should depress economic growth to below 2 percent in the first half of 2013," said Ms Bostjancic.

She said assuming the economy does not go off a deeper cliff, however, activity could resume to more than 2.5 percent growth in the second half of the year. For that to happen, wage growth would have to pick up and give some much-needed impetus for consumption.

The acceleration in real GDP in the third quarter primarily reflected an upturn in federal government spending, a downturn in imports, an acceleration in PCE, a smaller decrease in private inventory investment, an acceleration in residential fixed investment, and a smaller decrease in state and local government spending that were partly offset by downturns in exports and in nonresidential fixed investment.