Make us your home page

Economy grows slightly faster in third quarter

President Barack Obama speaks at Stromberg Metal Works on Friday in Beltsville, Md. Obama wants Congress to let businesses deduct the total cost of some investments, such as new equipment, through 2011 to allow for more hiring or other investments.

Getty Images

President Barack Obama speaks at Stromberg Metal Works on Friday in Beltsville, Md. Obama wants Congress to let businesses deduct the total cost of some investments, such as new equipment, through 2011 to allow for more hiring or other investments.

WASHINGTON — The U.S. economy grew slightly faster in the summer as Americans spent a little more — but far too little to reduce the high unemployment that is frustrating voters before Tuesday's midterm elections.

The Commerce Department said Friday that the economy expanded at a 2 percent annual rate in the July-September quarter. It marked an improvement from the feeble 1.7 percent growth in the April-June quarter.

Consumers helped boost last quarter's economic growth with 2.6 percent growth in spending, slightly better than the 2.2 percent rate in the second quarter.

Businesses also spent more to replenish their stockpiles. That trend has provided a big lift to the economy since the recession ended. But economists note that businesses will no longer need to rebuild their stockpiles so much in coming months. So the economy won't benefit as much from such spending in the year's final three months.

Last quarter's gain in Gross Domestic Product marked the biggest quarterly increase since a 4.1 percent gain at the end of 2006, before the recession hit.

Without more spending by consumers and businesses going forward, economists fear little downward movement in the 9.6 percent unemployment rate.

"We're just muddling along," said Ken Mayland, president of ClearView Economics. "I think it is going to be hard to break out of this sluggish-growth rut."

President Barack Obama's top economist, Austan Goolsbee, acknowledged faster growth is needed to drive down unemployment. "Given the depth and severity of the recession, considerable work remains before our economy is fully recovered," he said.

The president said Friday that his mission is to accelerate the recovery. He's calling attention to a proposal he says would create jobs, grow the economy and help businesses.

Obama wants Congress to let businesses deduct 100 percent of the cost of some investments, such as new equipment, through 2011. Businesses now can deduct half of such costs.

Obama says such a break would leave businesses with extra money they could use for hiring or investments.

With consumers spending more, less went into their savings. They saved 5.5 percent of their disposable income in the July-September quarter, down from 5.9 percent in the April-June quarter. That's still a high savings rate. Before the recession, people saved only about 1 percent.

Growth in the October-December quarter isn't expected to improve much. A new AP Economy survey estimates a 2.4 percent pace.

If that's that case, the economy will end 2010 on weaker footing than it started. In the January-March quarter, the economy expanded at a 3.7 percent pace.

Under one rule of thumb, the economy would need to expand by 5 percent for a full year to knock the jobless rate down by a percentage point.

Economy grows slightly faster in third quarter 10/29/10 [Last modified: Friday, October 29, 2010 9:31pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.

Join the discussion: Click to view comments, add yours

  1. Federal agencies demand records from SeaWorld theme park


    ORLANDO — Two federal agencies are reportedly demanding financial records from SeaWorld.

    Killer whales Ikaika and Corky participate in behaviors commonly done in the wild during SeaWorld's Killer Whale educational presentation in this photo from Jan. 9. SeaWorld has been subpoenaed by two federal agencies for comments that executives and the company made in August 2014 about the impact from the "Blackfish" documentary. 
[Nelvin C. Cepeda/San Diego Union-Tribune/TNS]
  2. Legalized medical marijuana signed into law by Rick Scott

    State Roundup

    TALLAHASSEE — Gov. Rick Scott on Friday signed into law a broader medical marijuana system for the state, following through on a promise he made earlier this month.

    Gov. Rick Scott signed legislation on Friday that legalizes medical marijuana in Florida.
  3. Line of moms welcome Once Upon A Child to Carrollwood


    CARROLLWOOD — Strollers of all shapes and sizes are lined up in front of the store, and inside, there are racks of children's clothing in every color of the rainbow.

    At Once Upon A Child, you often as many baby strollers outside as you find baby furniture and accessories. It recently opened this location in Carrollwood. Photo by Danielle Hauser
  4. Pastries N Chaat brings North India cuisine to North Tampa


    TAMPA — Pastries N Chaat, a new restaurant offering Indian street food, opened this week near the University of South Florida.

    The menu at Pastries N Chaat includes a large variety of Biriyani, an entree owners say is beloved by millions. Photo courtesy of Pastries N Chaat.
  5. 'Garbage juice' seen as threat to drinking water in Florida Panhandle county


    To Waste Management, the nation's largest handler of garbage, the liquid that winds up at the bottom of a landfill is called "leachate," and it can safely be disposed of in a well that's 4,200 feet deep.

    Three samples that were displayed by Jackson County NAACP President Ronstance Pittman at a public meeting on Waste Management's deep well injection proposal. The sample on the left is full of leachate from the Jackson County landfill, the stuff that would be injected into the well. The sample on the right shows leachate after it's been treated at a wastewater treatment plant. The one in the middle is tap water.