U.S. GDP Growth Revised to 2.7% in Q3; Inventory, Fiscal Cliff Key in Q4

November 29, 2012 11:55 AM EST
The U.S. economy grew in the third-quarter, but not by as much as expected.

According to data from the U.S Department of Commerce, GDP rose by 2.7 percent in the third quarter, shy of the 2.8 percent expected on the Street. The number was up from growth of 2.0 percent in the second quarter.

Current production was up 8.7 percent in the period, indicating strong corporate profit growth. Post-tax profits which were unadjusted for inventories and capital consumption rose 18.6 percent from last year and 5.2 percent sequentially.

Private inventories added 0.77 points to growth, the Commerce Department noted. That's up from initial estimates of a 0.1 point drag.

Exports were revised lower to 1.1 percent of growth, from 1.6 percent initially reported.

Though the numbers are improving, some warn that the impending fiscal cliff and impact from Hurricane Sandy might cause more subdued growth in the fourth quarter. Higher than expected private inventories might also hit production, as businesses will require less to refresh stockpiles in the current quarter.

U.S. markets are reacting well to the news Thursday, with the S&P 500, Nasdaq. and Dow Jones Industrial Average all green on the session.

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