Third Quarter GDP Revised Up to 2.7% Growth Rate

The Commerce Department reported that real economic growth in the third quarter was revised higher, up from an “advance” estimate of a 2.0 percent annual rate last month to 2.7 percent in today’s “preliminary” estimate, due largely to rising inventories and higher government spending than first estimated.

Consumer spending was revised lower and business investment contracted for the first time in a year, so, the headline is clearly the most positive element of this report. Given the growing uncertainty about the “fiscal cliff” and a possible peak in consumer confidence as noted here the other day, virtually no one is optimistic about economic growth continuing at this pace in the period ahead.

In a separate report, the Labor Department said weekly claims for unemployment insurance fell for the second week in a row, down from an upwardly revised 416,000 (originally 410,000) to 393,000 for the week ending November 24th. The effects of Superstorm Sandy have distorted recent jobless claims figures, however, Labor Department officials indicated there was no significant impact from the storm in the latest data.

In fact, detailed state data for the week ending November 17th - when 410,000 (seasonally adjusted) claims were filed - included almost 50,000 fewer claims being filed (unadjusted) in the states affected by Sandy, suggesting the underlying trend is for sharply higher jobless claims than in recent months.