GDP data confirm recovery not advancing

The U.S. economy remains stuck in neutral, according to the latest data, continuing a pattern of steady growth that is too slow to bring down joblessness.

A consistent picture has emerged from a wide range of economic data since the spring: The expansion is solid enough that the nation is not dipping back into recession, yet so feeble that there is little progress in the recovery. The latest reading on gross domestic product, released Friday morning, fits that pattern.

The nation's GDP rose at a 2 percent annual rate in the July-through-September quarter, the Commerce Department said. That was a slight improvement from the 1.7 percent growth rate in the second quarter and the fifth straight quarter of expansion.

The continued tepid growth is a key reason the Federal Reserve is likely to undertake a new effort to boost the economy at its meeting next week. Friday's GDP numbers contained no promising signs for the future that might undermine that expectation.

Spending by U.S. consumers, the largest component of GDP, spurred the uptick, rising in the third quarter to a 2.6 percent annual rate, the strongest since the end of 2006. Another major factor in growth was businesses building up their inventories, a more worrisome sign, in that it is unlikely to be repeated in future quarters and firms may even need to cut back on inventories, detracting from future growth.

Business investment and federal government spending also contributed to growth, while international trade and the housing sector were drags on the economy.

President Obama, speaking Friday in Beltsville during an event on jobs and the economy at Stromberg Metal Works, pointed to the GDP news as a promising sign for the recovery, but he stressed that growth needs to strengthen.

"As we continue to dig out from the worst recession in 80 years, our mission is to accelerate that recovery and encourage more rapid growth," Obama said, "so businesses can continue to prosper and we can put millions of Americans looking for jobs back to work."

He used the occasion to argue for a tax law change that would allow businesses to depreciate the value of new equipment immediately, which would create greater incentive to expand and invest, he said.

GDP is the broadest measure of economic activity, capturing the value of all goods and services produced within U.S. borders during a given time period. The economy has been expanding, if slowly, since June 2009, when the Great Recession reached its official end, a panel of economists recently concluded.

As the economy gained momentum in late 2009 and early 2010, there was promise that a strong, self-sustaining recovery was kicking in. But as businesses completed a cycle of rebuilding their inventories and as government spending to stimulate the economy began tapering off in late spring, the growth rate started to slacken, a pattern that continued through the summer.

The long-term economic growth rate is trending at about 2.5 percent, attributed to an increasing population and rising worker productivity. That means that growth at or below that level, such as experienced over the past six months, is not strong enough to pull the economy out of its deep rut. That stands in contrast to past deep recessions, such as in 1982, which were followed by several consecutive quarters of 5 percent or faster growth.