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US Business investment on the rise

While the GDP figures added to the buoyancy of financial markets, some economists were more circumspect.
While the GDP figures added to the buoyancy of financial markets, some economists were more circumspect. Voxant Newsroom/Channel 5 News

THE world's largest economy expanded strongly in the third quarter, as businesses invested and consumers hit the shops after a long period of caution.

US GDP in the three months to the end of September accelerated to an annualised rate of 2.5 per cent, after scraping just 0.4 per cent and 1.3 per cent in the first and second quarters, respectively.

The brightest spot was a surge in business investment, which is running at a 16.3 per cent annualised rate, which suggests that corporate managers are finally optimistic enough to spend after a long period of caution - or that they can put off vital investment no longer. The 16.3 per cent figure was up from 10.3 per cent in the second quarter.

While the GDP figures added to the buoyancy of financial markets, some economists were more circumspect.

Katy Bostjancic of the Conference Board, which measures consumer confidence, believes the figures show "an unsustainable spurt".

She said: "Continued woes in the housing market are overshadowed by consumer concern over the anaemic labour market, as highlighted by the decline in consumer sentiment back to 2008 levels. Weak sentiment could limit the rise in consumption through the holiday season."

Topics:  business confidence united states economy


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