Economy Expands 2% in Q3

Stronger-than-expected growth reflects pick-ups in consumer and government spending, residential construction.

The economy in the U.S. expanded more than forecast in the third quarter, paced by a pickup in consumer spending, a rebound in government outlays and gains in residential construction.

Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.

Disposable Incomes

At the same time, consumers’ purchasing power eased, with disposable income adjusted for inflation rising at a 0.8 percent annual rate from July through September, the least since the end of 2011, after a 3.1 percent gain in the second quarter, today’s report showed. The saving rate fell to 3.7 percent from 4 percent.

Profit Projections

Others who lowered profit projections include 3M Co., the manufacturer of products ranging from Scotch tape to dental braces, and DuPont Co., the most valuable U.S. chemical maker, which also announced 1,500 job cuts.

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