Nov. 29 (Bloomberg) -- The economy in the U.S. expanded more than previously estimated in the third quarter as a narrower trade deficit and gains in inventory overshadowed a smaller gain in consumer spending.
Gross domestic product grew at a 2.7 percent annual rate, up from a 2 percent prior estimate, revised figures from the Commerce Department showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 2.8 percent gain. Household purchases climbed at a 1.4 percent rate, the least in more than a year and down from a previously reported 2 percent rate, and income gains were also cut.
“Economic growth is very modest right now,” Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, said before the report. “This is more or less the scenario we’re going to have over the course of 2013 as well.”
The report helps explain why Federal Reserve policy makers have said they’ll continue to pump money into the economy to spur growth and reduce joblessness. At the same time, an improvement in housing, employment gains and healthier household finances may help underpin consumer purchases, the biggest part of the economy.
Economists’ estimates for GDP, the value of all goods and services produced, ranged from 2 percent to 3 percent. The economy grew 1.3 percent in the second quarter.
Fewer Americans filed first-time claims for unemployment insurance payments last week as the labor market disruptions wrought by superstorm Sandy ebbed, a report from the Labor Department also showed today.
Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov. 24. Economists forecast 390,000 claims, according to the median estimate in a Bloomberg survey.
The slowdown in consumer spending last quarter reflected fewer purchases of auto fuel and services such as utilities, insurance and financial transactions, the Commerce Department report showed. Household purchases rose at a 1.5 percent rate in the previous three months.
Today’s report also offered a first look at corporate profits. Earnings climbed 3.5 percent in the third quarter from the previous three months, and rose 8.7 percent from the same period last year.
Revisions showed disposable income adjusted for inflation rose at a 0.5 percent annual rate, compared with a previously estimated 0.8 percent pace. The saving rate fell to 3.6 percent, compared with a 3.7 percent pace initially calculated.
Wages and salaries in the third quarter rose by $30.4 billion, less than the initially reported $43.3 billion. That compares with a revised $23.3 billion second-quarter gain that was about half than the previous estimate of $55.2 billion.