WASHINGTON – The government is expected to report today that the U.S. economy resumed growing in the third quarter, which would mark an end to the worst economic contraction since World War II.
Even though some economists say the report should dispel any doubts that the downturn is over, it may be cold comfort to workers and businesses.
Forecasters say third-quarter growth was likely 3 percent to 3.5 percent at an annual rate, driven largely by the federal stimulus. Although solid, that is not the kind of breakthrough turnaround needed to reverse the decline in gross domestic product last fall and winter. GDP declined at a 5.4 percent rate in the fourth quarter and 6.4 percent in the first quarter and has fallen for four consecutive quarters.
If the new GDP number falls in the expected growth range, it will not be big enough to spur significant new hiring, experts said. And forecasters generally think the fourth quarter and much of next year will see more anemic growth rates.
Not until the middle of next year, at the earliest, is the economy expected to gather enough momentum to put a meaningful dent in the nation’s high unemployment rate.
Adding to skepticism about what the growth uptick will mean was Wednesday’s report showing new-home sales dropped in September. The report prompted Goldman Sachs to downgrade its expectations for third-quarter GDP growth to 2.7 percent, from 3 percent.
A revival in the home-building industry was seen as positive for the economy in the third quarter. The housing market has been boosted by the government’s $8,000 tax credit for first-time homebuyers, a program that is set to expire at the end of November.