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US economy grew at 3.1 percent in summer

Published on NewsOK Modified: December 20, 2012 at 12:04 pm •  Published: December 20, 2012
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The government's final estimate of a 3.1 percent growth rate for gross domestic product last quarter is a sharp improvement over its initial estimate of a 2 percent rate — a figure that it later revised up to 2.7 percent based on a buildup in business stockpiles.

GDP measures the nation's total output of goods and services — from restaurant meals and haircuts to airplanes and appliances.

The further upward revision this month reflected stronger consumer spending, which accounts for about 70 percent of economic activity. The government said consumer spending grew at an annual rate of 1.6 percent in the third quarter, above its previous estimate of 1.4 percent.

The Commerce Department also revised up its estimate of spending by state and local governments to show a gain of 0.3 percent — the first quarterly increase in three years. State and local governments had previously been slashing payrolls and other spending in the aftermath of the Great Recession. Total government spending grew at 3.9 percent annual rate last quarter, reflecting a surge in defense spending.

The economy also got a boost in the third quarter from trade: Exports grew at a faster pace than previously estimated.

The NABE forecasting panel has said it expects GDP to grow 2.1 percent in 2013, little changed from expected 2.2 percent expansion this year. That would continue the tepid growth that has persisted since the official end of the recession in mid-2009.

But the NABE panel said it thinks growth will accelerate later in the year as long as Congress and the administration resolve their debate over taxes and government spending. Doing so would remove the uncertainty that, in part, is holding back spending, many economists say.