Third-Quarter Economic Growth Figure Revised Upward to 3.9 Pct.
The U.S. economy continued its recent record of surprisingly strong growth last quarter, with the Commerce Department reporting a 3.9 percent gain in the July-September period, half a point faster than previously thought.</br></br>The upward revision in the growth rate was due mostly to evidence that business investment in new equipment was greater than had been indicated by the initial figures released in October. The revised numbers were based on more complete source data, some of which is estimated in the advance release.</br></br>This latest evidence that the economy is surging ahead pushed up short-term interest rates yesterday. Investors and traders said they expect the Federal Reserve might seek to cool off the economy by providing less cash to the banking system, a move that would boost key overnight interest rates again. The Fed raised its target for overnight rates earlier this month by three-fourths of a percentage point, the sixth increase this year.</br></br>However, some analysts said the Fed likely would leave rates unchanged for the next two months as its policy makers wait to see whether this year's rate increases begin to slow economic growth. The central bank favors slower growth in the hope it will curb inflation.</br></br>The bond market, often prone to inflation worries, took yesterday's Commerce Department report in stride, partly because of another revision, also announced yesterday, that indicated that the economy has extra capacity to grow.