WASHINGTON -- The U.S. economy grew even faster in the third quarter than previously thought, but the current period is looking much weaker and many analysts see a sharper pullback early next year if the government's fiscal problems aren't resolved very soon.
In its latest revision of economic growth data for the third quarter, the Commerce Department said Thursday that gross domestic product expanded at an annual rate of 3.1% in the three-month period. That was up from its earlier estimates of 2.7% and 2%.
The revision was encouraging in that U.S. exports and consumer spending were a little stronger than previously estimated. Still, the overall advance in the third quarter came largely from a buildup of inventories and federal defense spending, neither of which is likely to be sustained.
Consumer spending, which accounts for more than two-thirds of GDP, increased by a tepid 1.6% in the third quarter. And while the housing recovery is now clearly helping to lift the broader economy, businesses have been reducing their investments on things like equipment.