Economy Grew at 4% in Third Quarter

The U.S. economy grew at a 4% annual rate in the third quarter, faster than the government's first estimate, and nearly three times the rate of growth in the previous quarter, the Commerce Department said Tuesday.

The government’s report on the gross domestic product showed that the strongest level of consumer spending of the year accounted for three-quarters of the increase.

GDP is the total value of all the products and services in the country.

Economists told Bloomberg that the report is a sign that while the recovery is choppy, it is still a recovery.

GDP grew at a faster pace than most observers had expected, Bloomberg said citing a composite of 51 forecasts that reached a consensus of 3.8%. The preliminary release of GDP said the economy grew 3.1% between July and September.

In addition to increased consumer spending, the improved growth rate reflects the biggest increase in inventories since the fourth quarter of 2000. Companies added inventories at an annualized rate of $15.5 billion, up significantly from the $1.9 billion reported in last month’s preliminary report.

Consumer spending jumped 4.1% in the third quarter, down slightly from the estimate of 4.2%. Despite this, it was still the largest gain in spending since the final three months of 2001. In spending increase was spearheaded by a 23.1% increase in the pace of durable goods spending, Commerce said.

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