Consumption Boosts US Growth

At a 2 percent annual rate, growth is accelerating in the United States during the third quarter. This acts as a strong argument for Obama, with only a little over a week until the presidential and legislative elections.

The first estimate of growth in the United States during the third quarter was slightly better than expected. At a 2 percent annual rate, it reflects an acceleration compared to the poor performance of 1.3 percent in the second quarter.

This figure, which may be revised several times over the next few weeks, is good news and confirms what has been indicated over the past two months: American consumption, boosted by a recovery in residential real estate, is pulling the U.S. economy upwards. The great fear that Europe’s recession may take hold in America is not warranted, for the moment.

With a little over a week until the presidential and legislative elections, this acceleration of growth gives President Obama an edge to argue against his opponent. The latter can no longer say the trend of the last three quarters shows that the economy is getting worse.

Rebound in Housing Construction

But for all that, 2 percent growth remains insufficient to reduce unemployment in the long run. Consumption, which represents about 70 percent of gross domestic product n the United States, rose from July to September at a rate of 2.5 percent against 1.5 percent in the spring. The rebound in housing construction is also contributing to this growth. Spending in this sector soared to 14.4 percent against 8.5 percent in the previous period. Low mortgage rates and rental demand are stimulating the U.S. economy as well.

It is regrettable, however, that a large part of this impulsion to spend comes from a further decline in savings. The savings rate, already very low at 4 percent, is falling to 3.7 percent. Without a net increase in income and a pool of creditworthy consumers, consumption cannot provide lasting stability to the U.S. economy.

This concern is heightened as two traditional engines of growth, investment and exports, are now acting as a brake. Companies reduced their investments at a rate of 1.3 percent. Measured by spending on equipment and software, investment stagnated after rising at a rate of 4.8 percent in the spring.

In addition, the slowdown in global demand has begun to affect U.S. exports. They now fluctuate around the rate of 1.6 percent, whereas they had climbed by 5.3 percent in the second quarter.