GDP Stunner: 3.5% Growth in Third Quarter
(Updated to provide further detail from the Commerce Department's GDP report, and with closing-day stock prices.)
WASHINGTON (TheStreet) -- The U.S. gross domestic product grew by a faster-than-expected 3.5% in the third quarter, the best reading in two years and the first time the economy has shown growth in four quarters.
Expansion was expected in the three-month period that ended in September, though analysts had forecast 3.2% growth. In the second quarter, GDP decreased by 0.7%.
Market watchers are sure to interpret the third-quarter number as the clearest signal so far that the worst recession in generations has turned. (Indeed, on the day, the Dow gained 199.89 -- a maddening figure for those who prefer their Dow movements in nice, big round numbers.) The figures released Thursday are "advanced estimates," and could end up being revised down or up in the coming weeks.Still, on the surface, the number looked promising -- just as the recent third-quarter earnings beats by bellwether companies have appeared promising: from banks like JPMorgan Chase (JPM) to industrial behemoths like Caterpillar (CAT) to tech stalwarts like Intel (INTC). The last time the economy registered this kind of growth was in the third quarter of 2007, when GDP grew by 3.6%. It has shrunk ever since, a string of contraction not seen since 1947. Credit the cash-for-clunkers program for a large portion of the GDP increase. Automobile output added 1.6 percentage points to the third-quarter GDP change, the Commerce Department said. In the previous period, autos added 0.19 percentage points. Juiced by the clunkers program, car demand also helped the country's overall durable goods output spike by 22% in the third quarter, Commerce said. In the previous period, durable goods fell by 5.6%.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV