US GDP grew at 2.7% in Q3, more than estimated

WASHINGTON The economy in the US 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% annual rate, up from a 2% prior estimate, revised figures from the Commerce Department showed in Washington, on Thursday.

Household purchases climbed at a 1.4% rate, the least in more than a year and down from a previously reported 2% rate, and income gains were also cut.

“We’re just muddling through,” said Brian Jones, a senior US economist at Societe Generale in New York. “The mix between final demand and inventories was far less favorable. The consumer spending numbers are a reflection of the fact that job growth remains sluggish.”

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.

Meanwhile, fewer Americans filed first-time claims for unemployment insurance payments last week as the labour market disruptions wrought by superstorm Sandy ebbed. Applications for jobless benefits decreased by 23,000 to 393,000 in the week ended Nov 24.

Stock-index futures held earlier gains after the reports on optimism lawmakers will reach an agreement in budget talks.