Third Quarter Numbers: U.S. Economy Picks Up

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The American economy grew at a better-than-expected, but still modest rate of 2 percent in the third quarter, from July to September, buoyed by consumer spending and the federal government, according to figures released on Friday.

The Commerce Department said growth in the period accelerated from 1.3 percent in the previous quarter, from April to June.

The New York Times said the GDP was also aided by a stronger housing market and defense spending, but economists warned that growth would slow if exports remained weak and businesses were uncertain about policy in Washington.

CNNMoney noted that a major economic theory suggests that growth needs to be around 3 percent a year to lower unemployment by 1 percentage point. The unemployment rate in September was 7.8 percent.

The Wall Street Journal reported that consumer spending accounted for most of the increase in GDP, with expenditures climbing 2 percent compared to 1.5 percent in the second quarter. It also noted that federal government spending, especially in national defense, jumped 9.6 percent, compared to a .2 percent fall in the second quarter.

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