WASHINGTON (AP) -- The Commerce Department issues its third and final estimate of how fast the U.S. economy grew in the July-September quarter. The report is scheduled to be released at 8:30 a.m. Eastern time Friday.
SOLID 3Q GROWTH: Analysts expect third-quarter growth will be mostly unchanged at a 3.5 percent annual rate, according to a survey of economists by FactSet. That would be essentially the same as the 3.6 percent rate estimated a month ago.
VOLATILE STOCKPILING: Economists forecast that growth has slowed to an annual rate of 2 percent to 2.5 percent in the current October-December quarter. That's mostly because half of the third-quarter growth was due to a buildup in business stockpiles, which can be volatile.
UNDERLYING STRENGTH: Outside the volatility caused by changes in stockpiles, many analysts say the economy is improving. Steady hiring has lowered the unemployment rate to a five-year low of 7 percent. And much of the November data so far have been upbeat.
Consumer spending at retail businesses rose by the most in five months. Factories increased output for the fourth straight month, led by a surge in auto production. Builders broke ground on homes at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates. Auto sales haven't been better since the recession ended 4½ years ago. And the stock market is at all-time highs.
Analysts will pay close attention to consumer spending in the fourth quarter. It drives 70 percent of economic growth. In the third quarter, consumers increased their spending at the slowest pace since late 2009. But much of the weakness was because of a decline in utility spending, dragged lower by an unseasonably cool summer.
Spending on goods rose at the fastest pace since early 2012.
Congress gave final approval Wednesday to legislation that reduces federal spending cuts and averts the risk of another government shutdown early next year. The prospect of less fiscal drag next year has led many economists to predict a better year for the economy in 2014.
The Federal Reserve on Wednesday released its updated economist forecasts, predicting growth of 2.3 percent this year and roughly 3 percent next year. Those figures are in line with a survey of 38 economists conducted this month by the Associated Press.
A stronger outlook for the economy and job market prompted the Fed this week to begin winding down its bond-buying program, which was intended to lower long-term interest rates and encourage more borrowing and spending.
The Fed said Wednesday that it would begin reducing its $85 billion-a-month in bond purchases by $10 billion in January. Fed Chairman Ben Bernanke said that if the economy keeps improving, the bond purchases will be trimmed by similar amounts at coming meetings next year.
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