Positive Surprise

By Isaac Cohen*

Two reports released in Washington, last week, about US economic performance caused a positive surprise among analysts and observers. First, the Commerce Department estimated at 2.8 percent US annualized economic growth for the third quarter, above the average of 2 percent of this year’s first half.

Last Friday, the Labor Department released the delayed monthly employment report, indicating that 204,000 new non-farm jobs were created during October. Additionally, revised figures for August and September, pushed monthly job creation upwards, during the last three months, to more than 200,000 new jobs.

Growth of 2.8 percent in the third quarter was the highest in a year without including the impact of the government shutdown. Still, the figure revealed mixed signals. For instance, one percentage point of the increase in growth was caused by inventory acquisition. Also of concern is a decrease to 1.5 percent in consumer spending, which was the smallest increase in two years, together with 1.7 percent less federal government spending, during the last quarter. Among the positive signals was a strong increase of 14.8 percent in residential housing investment.

The October positive employment report , which included the government shutdown, generated two sorts of response. A Wall Street Journal editorial asked “what shutdown?” and answered it had no major impact on hiring by private employers. Labor Secretary Thomas Perez said “we would have had more but for the shutdown.”

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC Washington Office.


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