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Wednesday’s positive housing and consumer confidence numbers are followed on Thursday by low economic growth indicators. The United States Commerce Department revised the annual growth of real GDP in the second quarter of 2012 down to 1.3 percent from 1.7 percent reported in August.
About half of the downward revision is due to the massive droughts in the Mid-West. Crop production was cut by $12 billion, and farm inventories dropped by $7.9 billion.
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According to the Labor Department, the four-week moving average for jobless benefits claims dropped to 374,000, but the economy will need to grow at at least 3 percent in order to see a substantive change in unemployment. In 2011, the economy grew about 1.8 percent for the year.
This sluggishness prompted the Federal Reserve to enact quantitative easing round three, under which $40 billion worth of mortgage-backed securities will be purchased every month until conditions improve. The markets initially rallied behind the news, and are up so far on September 27 despite the news.
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