WASHINGTON -- US economic growth accelerated this summer as consumers and businesses boosted spending, allaying at least for now concerns of a slide back toward recession. Gross domestic product (GDP), the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 2.5 percent from July through September, the strongest performance in a year, the Commerce Department said Thursday.
Economists surveyed by Dow Jones Newswires expected GDP to rise 2.7 percent.
The economy grew a paltry 0.4 percent in the first quarter and 1.3 percent in the second quarter of the year, sparking concerns of a new downturn.
But in the third quarter, consumer spent more on durables -- goods like cars and refrigerators -- and services, while business investment surged.
The first estimate of the economy's benchmark indicator showed third-quarter personal consumption expenditures up 2.4 percent, compared with only 0.7 percent in the preceding period.
Businesses also were investing, especially in equipment and software. Nonresidential fixed investment jumped 16.3 percent after a 10.3 percent rise in the second quarter.
Federal government spending and rising exports also helped the economy, while inventory investment and falling state and local government spending dragged on growth.
Real final sales -- GDP less changes in private inventories -- increased 3.6 percent, compared with a 1.6 percent rise in the second quarter.
The pace of growth rose as businesses rebounded from natural disasters in Japan and despite uncertainty over the United States' fiscal outlook and a rolling financial crisis in Europe.
Federal Reserve officials meet Tuesday and Wednesday to discuss whether there is anything else they can or should do to spur growth.
The core inflation rate -- which excludes volatile moves in food and energy prices and is closely watched by the Fed -- increased 2.1 percent from the previous quarter. That followed a 2.3 percent gain in the second quarter.
The overall price index for personal consumption expenditures increased by 2.4 percent in the third quarter, compared with a 3.3 percent rise over the previous three months.
Gross domestic purchase prices were up two percent, while the chain-weighted GDP price index increased by 2.5 percent.
