The U.S. economy looks set to weather the headwinds from Hurricane Sandy and the budget battles in Washington after picking up speed in the third quarter, Bloomberg said.
The gross domestic product (GDP) probably increased at about a 2.9 percent annual rate in the third quarter, according to economists from Goldman Sachs Group Inc. and Barclays PLC. That would be the fastest quarterly growth this year, beating the Commerce Department's initial estimate of 2 percent.
"The economy's momentum has picked up a bit" as the fundamentals of the private sector have improved, said Jan Hatzius, chief economist at Goldman Sachs in New York. He projects that third-quarter expansion will be revised up to 2.8 percent, and the fourth quarter may come in at 1.7 percent.
Help is coming from a housing recovery, a strengthening job market and healthier household finances that are driving gains in consumer confidence and spending. Though the damage from Sandy and an anticipated tightening of fiscal policy mean growth will decelerate this quarter and next, the U.S. economy may emerge on stronger footing in the second half of 2013.
The Bloomberg Economic Surprise Index, which compares 38 U.S. indicators with analysts' forecasts, exceeded zero in mid-October for the first time since May and was 0.04 on Nov. 16, up from this year's low of minus 0.4 on July 30. The projected upward revision to third-quarter GDP, due from the Commerce Department Nov. 29, will come largely from a narrower trade deficit and a bigger jump in stockpiles than initially estimated, economists said. Read more.