GDP Increase Beats Estimate

Splurging shoppers helped the economy hum along faster than first thought in the third quarter, but high energy prices could weigh on consumers in the months ahead.

Gross domestic product -- the value of goods and services produced within the U.S. -- increased at an annual rate of 3.9% in the July-to-September quarter, the Commerce Department reported Tuesday.

“I think the economy has found its groove,” said Mark Zandi, chief economist at Economy.com.

But sinking confidence among consumers raised questions about their appetite to spend in coming months. The Conference Board’s consumer confidence index fell to an eight-month low of 90.5 in November from 92.9 in October. It was the fourth straight monthly decline.

High energy prices and concerns about jobs are depressing confidence, analysts said.

The new third-quarter GDP figure was up from an initial estimate of 3.7% growth and was better than the 3.3% pace posted in the second quarter.

The economy grew to $10.9 trillion, on an annualized, inflation-adjusted basis, in the third quarter.

The main reasons for the improvement: stronger consumer spending -- which grew at a 5.1% pace, the fastest clip since the end of 2001 -- and more robust business investment in equipment and software. Growth in U.S. exports also helped.

The International Council of Shopping Centers trimmed its sales forecast for November, suggesting that the buying surge Friday fizzled dramatically as the first weekend of the holiday shopping season wore on.

Sales at stores open at least a year will be up 2.5% to 3% for the month, the group said. The original forecast was 3% to 4%.

“Consumers are alive and well but not as lively as in the summer,” said Stuart Hoffman, economist at PNC Financial Services Group.

He expects GDP to slow to a still-respectable 3.3% rate in the current quarter. Others think that it could clock in around 4%. In either scenario, though, most analysts don’t expect consumers to be as enthusiastic as they were in the third quarter.

As for the corporate sector, a key measure of business profit fell 2.4% in the third quarter from the second, the GDP report said. Analysts said earnings were restrained by the string of hurricanes that ripped through the Southeast, high energy prices and slower productivity growth.