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26.11.03, 01:54
GDP zooms; corporate profits soar
By Sue Kirchhoff, USA TODAY
WASHINGTON — The economy raced ahead at a blistering 8.2% annual rate in the
third quarter and corporate profits soared, the Commerce Department said
Tuesday, as a second report showed consumer confidence jumped sharply in
November.
The nation's gross domestic product, the broadest measure of goods and
services produced in the USA, rose much faster than Commerce's initial 7.2%
estimate of just a month ago — the fastest pace in nearly 20 years and a
huge jump from the 3.3% pace of the second quarter. Further, corporate
profits jumped more than 30% from year-ago levels and more than 11% from the
second quarter.
The new, rosier economic estimate is based on recent data showing more
robust business spending than expected, particularly high-tech purchases,
which jumped 18.4% from the second quarter. At the same time, exports rose,
and companies did not rely as heavily on existing inventories to meet
growing orders. Economists said the report made it clear the economy was on
firmer footing, though growth is likely to slow to a 4.5% pace through the
end of the year.
"This turnaround in investment is a key sign of a sustained economic
recovery and suggests that the third quarter was not a one-hit wonder," said
Brian Wesbury of Griffin Kubik Stephens & Thompson, a Chicago-based
investment bank.
In a second upbeat report Tuesday, the New York-based Conference Board said
its consumer confidence index jumped a better-than-predicted 10 points in
November to 91.7. That is the highest level since fall 2002. The report,
based on a monthly survey of 5,000 households, showed consumers are more
optimistic about the current economic situation, as well as the future
outlook.
"Consumers believe a slow-but-sure labor market turnaround is underway,"
said Lynn Franco, director of the Conference Board's Consumer Research
Center. "The rise in expectations is a signal that consumers will end this
year much more upbeat than when the year began."
The percentage of consumers calling jobs "hard to get" fell to 29.5% in
November from 33.7% in October, while those calling jobs abundant rose
slightly to 13.2%. The percentage of consumers calling current conditions
bad declined 4 points to 24%.
Despite the optimism, there was little expectation of a surge in the job
market. The unemployment rate, now 6%, has been stuck in a narrow range even
as the economy has started to improve, and it is expected to come down only
gradually. The number of consumers expecting more jobs will be available in
the next six months actually declined to 18.2% from 19.6%.
