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Solid 3Q US Economic Growth Expected   10/30 06:07

   Many economists predict that overall growth, as measured by the gross 
domestic product, reached a healthy 3 percent annual rate in the July-September 
quarter, according to a survey by data firm FactSet.

   WASHINGTON (AP) -- It's taken years, but the U.S. economy may finally be 
reaching a sustainable cruising speed.

   Many economists predict that overall growth, as measured by the gross 
domestic product, reached a healthy 3 percent annual rate in the July-September 
quarter, according to a survey by data firm FactSet.

   The Commerce Department will release its first estimate of GDP growth in the 
third quarter at 8:30 a.m. EDT Thursday.

   If the expectations prove accurate, it would be the fourth quarter in the 
past five in which the economy has reached at least a 3 percent growth rate.

   For the April-June period, growth reached a sizzling 4.6 percent rate. But 
that marked a sharp bounce back from the first quarter, when the economy shrank 
at an annual rate of 2.1 percent --- a contraction normally associated with 
recessions. The stumble reflected largely a harsh winter that closed shopping 
malls and disrupted much economic activity.

   After the roller-coaster first- and second-quarter gyrations, most analysts 
think the economy is poised to achieve consistently stronger growth for the 
rest of this year and all of 2015.

   Many think full-year growth for 2015 will hit 3 percent, giving the economy 
the best annual performance since 2005, two years before the Great Recession 
began.

   Much of the optimism stems from the strength of job growth, which has 
lowered the unemployment rate to a six-year low of 5.9 percent. In September, 
the economy added 248,000 jobs, extending a string of strong gains.

   The additional workers should translate into more income and consumer 
spending, which accounts for 70 percent of economic activity.

   The strength in the United States comes amid weakness overseas. Europe is on 
the brink of its third recession in seven years, Japan is faltering and China 
and Brazil are also struggling.

   The Federal Reserve noted the brightening U.S. prospects as it ended a 
policy meeting Wednesday. It retained language in a statement saying it didn't 
expect to raise its benchmark interest rate for a "considerable time." But it 
also pointed to rising signs of strength, including job gains and lower 
unemployment.

   Against that backdrop, the Fed ended its third round of bond buying. Over 
the past six years, the Fed has pumped more than $3 trillion into the economy 
through bond purchases designed to keep long-term rates low.

   Most economists don't expect the Fed to begin raising rates before June. But 
they viewed the Fed's statement as a warning that if the economy strengthened 
more than expected in coming months, rate hikes could start occurring sooner 
than investors think.


(KA)


 
 
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