US economy grows by 2.5 percent in the third quarter

By Vicki Needham - 10/27/11 09:20 AM ET

The nation's economy made progress this summer after seemingly coming to a halt earlier this year, as consumer spending, businesses investment exports increased.

The Commerce Department said Thursday that the economy expanded at an annual rate of 2.5 percent in the July-September quarter — nearly double the 1.3 percent growth in the April-June quarter.

Although the expanded growth is a positive sign and will probably ease concerns over a second recessions, economists say it's not enough lower the 9.1 percent unemployment rate.

"In spite of headwinds hitting the U.S. economy, today’s GDP report — the ninth straight positive quarter — reflects strong consumer spending and export growth and continued investment by American businesses,” said Commerce Secretary John Bryson.

“Despite today’s encouraging numbers, we must do more to create jobs. That’s why it’s critical that Congress act to pass the measures in the president’s jobs act.”

Consumer spending — a key driver that represents 70 percent of the economy — increased 2.4 percent in the third quarter, a more than threefold increase over the 0.7 percent in the second.

The personal saving rate — as a percentage of disposable personal income—was 4.1 percent in the third quarter, compared with 5.1 percent in the second quarter.

Durable goods increased 4.1 percent, in contrast to a decrease of 5.3 percent.

Services were up 3 percent, compared with an increase of 1.9 percent.

Business investment increased 16.3 percent in the third quarter, compared to an increase of 10.3 percent in the second, with equipment and software up 17.4 percent. That is compared to an increase of 6.2 percent in the second quarter.

Exports increased 4 percent in the third quarter, compared to an increase of 3.6 percent in the second, while imports negated some of the gains — increasing 1.9 percent, compared to an increase of 1.4 percent.

The second estimate of gross domestic product — the measure of all goods and services — based on more complete data, will be released on Nov. 22.

Talk among economists has leaned toward the possibility of a second recession — unemployment remains persistently high, with the economy sputtering in the spring and into the summer as consumers faced high gas prices and the European debt crisis weighed heavily on U.S. stock markets.

Gross domestic product fell to 0.9 percent for the first six months of the year.

Policymakers are scrambling for ways to boost economic growth, with President Obama on the road part of every week to tout his jobs plan. The White House also is moving ahead without Congress on initiatives to help the housing market, veterans find employment and help consumers with their student loan debt.