Third-Quarter GDP Gains 3.5% in First Rise in a Year

The U.S. economy expanded at a 3.5% annual rate in the third quarter, marking the first increase in a year, the Commerce Department said Thursday.

The gross domestic product gain topped economists’ forecasts of a 3.2% increase, Bloomberg reported. Household purchases rose 3.4%, the most in two years.

GDP fell 0.7% in the second quarter and the economy had contracted 3.8% in the 12 months through June, the worst such performance in 70 years, Bloomberg reported.

A big part of the consumer spending increase was pegged to the government’s “cash for clunkers” automobile incentive program, Commerce said.

Durable goods purchases, which include autos, jumped 22%. Excluding auto sales, production and inventories, the economy expanded 1.9% for the quarter.

Residential construction rose at an annual rate of 23% last quarter, the first gain in almost four years.