U.S. GDP Slows to 1.6% Rate in 3rd Quarter

by Patrick Lunsford, CollectionIndustry.com

Economic growth in the U.S. slowed considerably in the third quarter, according to figures released by the Commerce Department Friday.

The GDP rose at an adjusted annual rate of just 1.6% from July 1 to September 30 this year, compared to a 2.6% increase in the second quarter. Most economists were expecting GDP growth to be on the plus-side of 2%.

The 1.6% growth rate was the lowest since the first quarter of 2003.

Overall, the economy has grown 2.9% in the past year, the slowest year-over-year growth in three years. After a sizzling first quarter, which saw the GDP grow at a 5.3% pace, the economy has cooled considerably with the second quarter?s 2.6% rate and now the third quarter coming in at 1.6%.

An economic cooling-off in the second half of 2006 has been broadly anticipated, and many economists said that the third quarter?s preliminary numbers aren?t that bad. Housing appeared to have the largest impact on the flagging growth. Both consumer and government spending ? including a 6.9% increase in non-defense spending ? increased in the third quarter.

“Housing took a toll on the economy but bear in mind this was last quarter, and the current quarter is on a growth pace that would double this number because of consumer spending?, Richard Yamarone of Argus Research Corp. told Reuters.

Joel Naroff, president of Naroff Economic Advisors, told MarketWatch, ?You really don’t have a weak economy if consumers are consuming, businesses are investing, exports are growing and imports are strong.”