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Economy Shows Growth, Consumer Confidence Up

BY Admin  November 26, 2002 at 1:45 PM EST

The U.S. Commerce Department reported that the United States’ Gross Domestic Product rose 4 percent over the summer, exceeding forecasters’ expectation of a 3.8 percent growth rate and the department’s own earlier prediction of 3.1 percent. The GDP is a measure of the total value of goods and services produced in the United States.

Government spending, inventory purchases by businesses and an up-tick in international trade contributed to the GDP jump, the Commerce Department said in a statement.

In a separate report, the nation’s consumer confidence index rose to 84.1 from a revised 79.6 reading in October. The increase reversed a five-month trend of pessimism about the economy among U.S. consumers.

The index is taken by the New York-based Conference Board and is based on surveys of some 5,000 households. The number is seen as a critical gauge of the financial health of the nation since consumer spending accounts for some two-thirds of the nation’s economic activity.

“The rebound in expectations suggests consumers do not expect economic conditions to become worse,” Lynn Franco, Director of the Conference Board’s Consumer Research Center, said in a statement. “This comeback, combined with yesterday’s upbeat forecasts for Christmas spending, signals a brighter holiday spending season than was anticipated only a month ago.”

The 84.1 reading, however, was not as high as the 85.0 that had been forecast.

In other economic news, October home sales fell short of predictions but stayed strong. New home sales declined by 4.5 percent in October, according to another report issued by the Commerce Department. Sales in October rose in the South and West, but declined in the Northeast and Midwest, the report said.

Despite the decline, the month’s sales pace marked the third best monthly level on record, the AP reported.

Economists had expected a slowdown in the recent home-buying surge that had been fueled by low mortgage rates. Sales had reached an all-time high in September, which means the October numbers, while lower, still indicate a strong market.