The U.S. economy shook off headwinds from hurricanes Katrina and Rita to grow at a faster-than-expected 3.8 percent annual rate in the third quarter, a Commerce Department report showed Friday. [...]The economy accelerated, but core inflation slowed:
Wall Street economists had forecast GDP would advance at a 3.6 percent rate in the July-to-September quarter. The economy has now expanded at rates exceeding 3 percent for 10 straight quarters. [...]
Despite surging prices at the gasoline pumps, the report showed that so-called core inflation, which exempts food and energy from its calculation, declined in the third quarter. A price gauge favored by Federal Reserve Chairman Alan Greenspan -- personal consumption expenditures excluding food and energy -- increased at a 1.3 percent annual rate compared with 1.7 percent in the second quarter. That marks the mildest rate of core price rises since the second quarter of 2003.Inventories were reduced, opening the way for further expansion to replace those inventories:
Businesses reduced inventories for a second straight quarter. Stocks of unsold goods dropped at a $16.6-billion annual rate in the third quarter after declining at a $1.7-billion rate in the second quarter.
The third-quarter inventory drop was the largest since the fourth quarter of 2001 -- after the attacks in New York and on the Pentagon -- when they fell at an $86.7-billion rate, a department official said. It also marked the first back-to-back quarterly drops in stocks of unsold goods since the third and fourth quarters of 2001.
Good news all around. Hurricanes, floods, wars, government incompetence - and the U.S. economy keeps on truckin'. Amazing.