By Mark Whitehouse
If recent data are any indication, the state of the U.S. economy isn't quite as awful as expected.
Economists at Macroeconomic Advisers, a consulting firm, estimate that the U.S. economy grew at a blazing 17.1 percent annualized rate in October, driven in large part by inventory investment and net exports. They expect annualized growth for the whole fourth quarter of 2011 to be a more moderate 3.7 percent. That's still up from a previous forecast of 2.7 percent, and from 2.0 percent in the third quarter.
The jump in estimated growth mirrors other indicators suggesting the economy pulled out of a summer slump in the fall. In October, retail sales saw their largest increase since March. Building permits rose more than they had since December. Industrial production ticked up. Other economists are joining Macroeconomic Advisors in upping their growth forecasts for the current quarter.
None of this means it’s time to uncork the champagne or scrap such supports as the payroll-tax break and extended jobless benefits. The deepening crisis in Europe could still whack growth worldwide, unemployment is still high at 8.6 percent and economists don’t expect next year's growth rate to be much more than 2 percent, well below the economy's longer-term potential.
The threat of a new recession, though, is fading for now.
(Mark Whitehouse is a member of the Bloomberg View editorial board.)-0- Dec/14/2011 17:55 GMT