Economy in U.S. Grew 2.5% in Third Quarter

The U.S. economy grew faster than estimated in the third quarter, led by stronger consumer spending and fueled by increased earned income that can stoke demand in 2011.

The revised 2.5 percent increase in gross domestic product compared with 2 percent estimate issued last month and increased 1.7 percent in the second quarter, Commerce Department figures showed today in Washington. Consumer purchases rose at its fastest pace since the last quarter of 2006.

wages of workers in the six months to September were revised by approximately $ 59 million, giving the Americans can ramp up their spending ahead of Christmas shopping season. Along with gains in business investment in new equipment, the figures show an expansion in evolution brought more demand and less by the replenishment of inventories.

"You have a little stronger final sales - which is part of the report is very encouraging," said Michael Feroli, chief U.S. economist JPMorgan Chase & Co. in New York. "It makes me a little more comfortable with the sustainability of the recovery."

Separate figures from the National Association of Realtors showed that the economy is not without its setbacks. Sales of existing homes fell more than expected in October as foreclosure moratoriums and the lack of credit troubled U.S. housing market.

Purchases declined 2.2 percent to an annual rate of 4.43 million from 4.53 million in September. Economists had projected sales would fall to a pace of 4.48 million, according to the median forecast in a survey.

Shares decline

Stocks fell for a second day after the home sales report and after North Korea fired artillery shells on an island in South Korea. 500 of Standard & Poor's fell 1.5 percent to 1,180.12 at 12:29 pm in New York. The yield on the benchmark 10-year Treasury, which moves inversely to prices, fell to 2.75 percent from 2.80 percent late yesterday.

in the third quarter growth figures today showed greater gains in exports, consumer spending and business investment in new equipment than previously estimated.

Economists surveyed  projected growth rate increases to 2.4 percent, according to the median of 78 forecasts. The estimates ranged from 2 percent to 2.9 percent.

Consumer spending, which accounts for about 70 percent of the economy, grew at a rate of 2.8 percent per year in the third quarter, the Commerce Department figures showed. The gain compared with an increase of 2.6 percent previously reported and reflects an increase in purchases of used cars.

Wages revised upwards

Today's figures also showed that in the second quarter, wages and salaries increased at a revised 97.4 billion in the last three months of 2010 compared to 51.1 billion U.S. dollars initially reported. The figures incorporate new data, more complete Department of Labor. wages in the third quarter increased by 51.4 billion U.S. dollars, more than 38.4 billion U.S. dollars initially reported.

At the same time, corporate profits rose 2.8 percent after an increase of 3 percent in the second quarter, today's report showed. Revenue rose 28 percent from the same period last year.

"Families are getting a slightly larger share of the pie," said Feroli. "For a more balanced recovery is good to see that households are getting a little more."

Business spending on new equipment and software advanced at a rate of 16.8 percent last quarter, compared with an initial estimate of 12 percent, the GDP report showed today.

"Slow and Steady"

"Although we are not expecting a rapid improvement in the economic environment, there is a slow and steady recovery throughout the year" in 2011, Ronald Sargent, chief executive of Staples Inc., said in a teleconference on 18 November to discuss earnings for the world's largest retailer of office supplies. "The basic office supplies and computers and accessories were strong during the third quarter."

Federal Reserve policy makers are concerned about growth may not be strong enough to bring down an unemployment rate held at 9.6 percent last month.

Unemployment is currently "high and, given the slow pace of economic growth is likely to remain for some time," said the Fed chairman, Ben S. Bernanke in a speech in Frankfurt on 19 November. Bernanke defended the additional $ 600 billion in monetary stimulus the Fed announced earlier this month.

preferred price gauge the Fed, which is tied to consumer spending and excluding food costs and energy, rose at an annual rate of 0.8 percent without review in the third quarter, down 1 percent increase over the previous quarter. longer-term projection of the central bank is a range of 1.7 percent to 2 percent.

Black Friday

Wal-Mart Stores Inc., the world's largest retailer, said yesterday that it will match the prices listed in the notices of competition on Black Friday, the day after Thanksgiving. Savings start with the Thanksgiving Day special online on November 25 and runs until 27 November, offers electronic products, household items and clothing.

Bentonville, Arkansas, Wal-Mart is offering free shipping to nearly 60,000 households in rental items through its website, as it competes for budget-conscious buyers.