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 Gross domestic product likely grew at a 3.0 percent annual pace,
according to a Reuters survey of economists, with housing, trade,
government and consumers also lending support.
While that would be a step down from the second quarter's brisk 4.6
percent pace, it would the fourth quarter out of five that the
economy has expanded at or above a 3 percent clip.
"It was a very good quarter for business investment," said Ryan
Sweet, a senior economist at Moody’s Analytics in West Chester
Pennsylvania.
Businesses, with a war chest of about $2 trillion, have been slow to
ramp up spending. But change is in the air.
With unused factory capacity nearing pre-recession levels, the GDP
report is expected to show a second straight quarter of double-digit
growth in spending on equipment and a rise in investment in
structures.
While data on Tuesday suggested some moderation in the pace of
equipment investment in the fourth quarter, it is still expected to
remain strong enough to keep the economy on a higher growth pace.
"There is no doubt that business investment activity has picked up
over the last quarters, reflecting more confidence in the durability
of the recovery," said Harm Bandholz, chief U.S. economist at
UniCredit Research in New York.
One of the few areas that is likely to drag on growth is
inventories. A build up in inventories had added 1.42 percentage
points to growth in the second quarter.
The Commerce Department will release its first snapshot of
third-quarter GDP at 8:30 a.m. (1230 GMT) on Thursday.
CONSUMER SPENDING TO MODERATE
The data comes one day after the Federal Reserve ended its asset
purchasing program. Fed officials, who saw sufficient underlying
strength in the broader economy, described business investment as
"advancing."
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While growth in consumer spending is expected to have decelerated
from the second-quarter's 2.5 percent pace, it likely still
contributed to GDP growth. Consumer spending accounts for more than
two-thirds of U.S. economic activity.
The moderate pace of consumer spending likely helped keep inflation
pressure under wraps during the quarter, with the two price indexes
in the report expected to have decelerated sharply.
Declining gasoline prices and accelerating job growth, which is
expected to lift wages, will provide tailwinds for consumer spending
in the fourth quarter.
Housing will be another source of growth thanks to a rebound in home
building and sales, which lifted brokers' commissions. Spending on
home improvements will also help. Government spending is also
expected to offer some support.
A smaller trade deficit should be another boost to growth. Although
there are concerns a strengthening dollar and slowing euro zone and
Chinese economies will crimp U.S. export growth, economists believe
the impact will be marginal.
"We expect the positive momentum established in the third quarter to
carry over into the fourth quarter," said Guy Berger, an economist
at RBS in Stamford, Connecticut. "We believe the direct impact on
U.S. GDP from a strong dollar and slower global growth is small."
(Reporting by Lucia Mutikani; Editing by David Gregorio)
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