November 30, 2004

THIS SEEMS LIKE GOOD NEWS:

Strong consumer spending and business investment and a slightly lower than previously reported trade deficit meant the US economy grew at a 3.9 per cent rate in the third quarter, the Commerce Department said.

The upward revision from the 3.7 per cent advance estimate was above consensus expectations and represented a rebound from 3.3 per cent growth in the second quarter.

Core personal consumption expenditures inflation, excluding food and energy, the Federal Reserve’s preferred measure of inflation, was unchanged at a 0.7 per cent rate in the quarter – the lowest reading since the 1960s.

Interest rates are expected to rise, though.