Ahead of the Bell: US Economy-GDP

After strong spring rebound in US growth economy likely slowed in summer

Associated Press
Economy grew at 3.9 percent rate in April-June quarter

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In this Monday, Aug. 17, 2015 photo, construction workers work at the site of a high-rise condominium as part of the downtown Doral complex developed by the Codina Partners in Doral, Fla. The Commerce Department issues the third of three estimates of how the U.S. economy performed in the April-June quarter on Friday, Sept. 25, 2015. (AP Photo/Lynne Sladky)

WASHINGTON (AP) -- The Commerce Department issues the final of its three estimates as to how the U.S. economy performed in the April-June quarter. The report will be issued at 8:30 a.m. Eastern Friday.

STRONG GDP: The expectation is that the overall economy, as measured by the gross domestic product, grew at an annual rate of 3.7 percent in the second quarter, according to a survey of economists by data firm FactSet.

GDP GAINS: An estimate of 3.7 percent GDP growth would mark no change from the previous estimate. But it would be a significant rebound from the January-March period when the economy nearly stalled out, growing at an anemic 0.6 percent annual rate as an unusually harsh winter and other factors such as labor disruptions at West Coast ports combined to slow growth.

Economists believe that growth slowed in the July-September quarter to around 2.3 percent. They believe that's because businesses cut back on the pace of restocking store shelves.

Once unwanted inventories are worked down, the expectation is that growth will accelerate again in the final quarter of the year.

Economists at Macroeconomic Advisors are forecasting GDP growth of 2.7 percent in the October-December period.

Activity has been held back this year by a rise in the value of the dollar, which weakens sales of U.S. exports while making foreign goods more competitive in the United States.

Adding to the problems facing American manufacturers has been a significant slowdown in growth in China, a major market for U.S. products. The slowdown in China sent shockwaves through global financial markets as investors grew concerned that that the economic problems in China, the world's second largest economy, could be even worse than previously believed.

All these developments contributed to a decision by the Federal Reserve last week to keep its key interest rate unchanged at a record low near zero, where it has been since late 2008.

However, Fed Chair Janet Yellen said Thursday that she still believed the Fed would start raising rates before the end of this year. While the central bank would continue to monitor developments abroad, she said that, "we do not currently anticipate that the effects of these recent developments" will be large enough to impact the Fed's interest rate decisions.

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