Keep on Truckin'

The economic expansion that just won't quit:

[I]t was the ninth straight quarter the economy exceeded its long-term growth rate of about 3%. And although the nation can't match China's gazelle-like 9.5% clip, it is outperforming most other industrialized nations and topping average growth during the booming 1990s.

And analysts said the economy was actually stronger than it appeared, as a sharp drawdown of inventories during the quarter depressed the headline growth number. [...]

Fearing a slowdown earlier in the quarter, businesses curbed production.

But consumers kept buying, whittling store shelves. Inventories of autos, for example, were pared through aggressive sales promotions by General Motors Corp. and others.

The overall inventory reduction cut about 2.4 percentage points from second-quarter growth.

"The replenishment of diminished inventories soon will quicken economic activity," John Lonski, chief economist at Moody's Investors Service, said in a report Friday.

He added that inventory depletion of the size seen in the second quarter normally occurred during recessions — efforts to replenish such inventories "helps to power the economy out of a recession."

Some analysts are forecasting that growth in the current July-to-September period could hit or top 4%.

A separate report Friday suggested that inflation remained tame.

Especially amazing given the relatively high price of oil. Also interesting is that these nine straight quarters above 3% immediately followed the 2003 tax cuts. Let's make those tax cuts permanent!