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Continued: US economy grew at surprisingly solid 2.8 percent annual rate in Q3, boosted by stockpiles

  • Article by: MARTIN CRUTSINGER , Associated Press
  • Last update: November 7, 2013 - 2:35 PM

Overall government activity grew at a slight 0.2 percent rate, reflecting a 1.5 percent rise in state and local government spending — the best showing since the spring of 2009. Federal government spending dropped again, falling at a 1.7 percent annual rate.

The shutdown did not affect third-quarter growth. But it cost the U.S. economy an estimated $24 billion in October, according to Beth Ann Bovino, an economist at Standard & Poor's.

Economists are still optimistic that 2014 will be a better year. But that hinges on lawmakers avoiding another shutdown and reaching an agreement to fund the government past Jan. 15.

Most economists agree that the dimmer outlook means the Fed is likely to maintain its $85 billion-a-month in bonds purchases through March. The purchases are intended to keep long-term interest rates low and encourage more borrowing and spending.

"The economy is not growing at a strong enough rate for the Fed to think that cutting back on its support makes sense," said Joel Naroff, chief economist at Naroff Economic Advisors.

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