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Consumers, businesses boost US economy; 5 things we learn from GDP report

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Consumers are doing their part to stimulate the economy. Over the summer consumer spending, spurred by purchases of small items, rose by a 2.6 percent annual pace, the best performance for the consumer since 2006.

“They are buying smaller things, personal goods, nondurables, using more services such as taking their clothes to the dry cleaners,” says Mr. Naroff.

Businesses

Businesses are buying computers, software and other high-tech goods. This boosted the economy by 0.8 percentage points. Business spending on such goods rose by 12 percent for the quarter, the fourth consecutive quarter of double digit gains.

“They are finding the dollars and they are spending them,” says Naroff. “This tells me businesses are a little more confident.”

Inventories

Companies decided to rebuild their inventories. This added 1.44 percentage points to the economy, notes Fred Dickson, chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Oregon.

“This is not surprising, business typically builds inventory in anticipation of holiday sales,” says Mr. Dickson. “I think the seasonal aspect explains some of it.”

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