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U.S. Economy Continues to Grow, Recover

By MacKenzie C. Babb | Staff Writer | 26 October 2012
Close-up of Krueger (AP Images)

Krueger said President Obama’s administration is working to support the continued economic recovery and to create new jobs.

Washington — The U.S. economy posted its 13th straight quarter of growth as it expanded by 2 percent from July to September, according to a new Commerce Department report.

“Together with other economic indicators, this report provides further evidence that the economy is moving in the right direction,” Chairman of the White House Council of Economic Advisers Alan Krueger said in a statement on the report’s October 26 release.

He said that during the past 13 quarters the U.S. economy has expanded by 7.2 percent overall, with private components of gross domestic product (GDP) growing by 10.1 percent.

Krueger said that while there is still work to be done to achieve full economic recovery, the latest GDP report from the Bureau of Economic Analysis is encouraging.

U.S. economic activity significantly affects the economies of other nations. The U.S. GDP stood at $15 trillion in 2011. Measured by purchasing power parity exchange rates (equalizing what people can buy with different currencies), that came to about 1.3 times the size of the second largest economy, that of China (whose population is more than four times that of the United States) and more than three times the GDP of third-ranked Japan. With just 4.5 percent of the world’s population, the United States was responsible for 19 percent of total economic output.

In addition, U.S. companies and individuals directly invest more than $2 trillion abroad annually, making the United States the world’s largest direct investor in foreign economies. It also receives more investment from outside its borders than any other nation.

The October 26 report, which measures the total amount of goods and services produced in the United States, showed an increase of 2 percent from 1.3 percent growth the previous quarter.

Krueger said economic expansion for the three-month period was affected by a severe drought in more than half of the United States that is estimated to have taken 0.4 percentage point from overall GDP growth.

The report showed the third quarter increase in real GDP primarily reflected positive contributions from personal consumption expenditures, federal government spending and residential fixed investment that were partly offset by negative contributions from exports, nonresidential fixed investment and private inventory investment.

The acceleration in third quarter growth largely reflected an upturn in federal government spending, a downturn in imports, an acceleration in personal consumption expenditures, a smaller decrease in private inventory investment, an acceleration in residential fixed investment and a smaller decrease and state and local government spending that were partly offset by downturns in exports and nonresidential fixed investment.

The Commerce Department will release its second estimate for the third quarter, based on more complete data, November 29.