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October 26, 2012 2:30 PM, EDT

Third-Quarter GDP Rate Shows 2% Growth

The U.S. economy grew at an annual rate of 2% in the third quarter, improving from the second quarter, the Commerce Department said Friday.

The gross domestic product growth rate follows a 1.3% rate in the second quarter and a 2% rate in the first quarter.

GDP measures the value of all goods and services produced. The rate topped economists’ median forecast of 1.8%, Bloomberg reported.

Growth was buoyed by a stronger housing market and would have been 0.4% higher if not for a severe drought in the Midwest, Bloomberg said. 

Consumer spending, the biggest component of the economy, increased 2%, up from 1.5% in the second quarter, Commerce said.

Friday’s reading was the first of three for the quarter; Commerce will release two revisions in the next two months.