Washington – The United States economy grew at a surprisingly robust 4.1 percent annual pace in the third quarter, the Commerce Department said Friday. That is the strongest growth in nearly two years and only the third time the economy has expanded that quickly since 2006.
It is the latest evidence that the generally sluggish recovery is gaining strength, though economists noted that the underlying rate of growth remains as a trot, not a gallop – a pace of about 2.5 percent a year.
“We continue to believe that underlying growth will remain on a moderate trend,” said Joshua Shapiro, the chief United States economist at MFT Inc., a consulting firm. “The outlook is greatly dependent on the direction of the labor market, and hence the path of wage and salary growth and the ability of consumers to expand spending.”
With stronger growth, the job market is improving, but earnings and employment remain far from healthy levels, economists think. The unemployment rate fell to 7 percent in November from 7.8 percent a year earlier. But that improvement is in no small part because of workers leaving the labor force, and many working households are still struggling with stagnant incomes.
Still, the Commerce Department data, which raised the estimate of third-quarter growth from an earlier 3.6 percent, shows more evidence of faster and broad-based growth that might lead to a healthier labor market – and more solid growth – in 2014.
Ben Bernanke and private enterprise should get the credit for the USA’s improving growth. The White House and both Houses of Congress were ongoing headwinds. Additionally, the credit crisis recession forced businesses and the public into some sensible deleveraging. That inevitably slowed GDP growth but it was a necessary process and will underpin a longer-term expansion.
Most economists and politicians still talk about the soft jobs market as if they had no awareness of the accelerated rate of technological innovation, which we see all around us. This is a secular change which will not end because our species runs out of things to both invent and improve. Mankind is now creating much smarter and more capable machines, in a process that has only just begun.
This is very good news for all successful businesses, from ingenious start-ups to the multinational corporate giants which FT Money describes as Autonomies. The best of these companies are becoming wealthier than some small countries, and this trend will continue.
Additionally, most of us are benefiting from the process of accelerating technological innovation. However, there is a downside. Smart machines are replacing workers more rapidly than new jobs can be created. Given the choice between increasingly efficient machines which also have learning capabilities, and employees, however qualified the latter may be the obvious choice for most businesses is to increase the ratio of machines to employees.Back to top