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December 21, 2013

US economy expands at 4.1 percent rate

WASHINGTON (AP) — The U.S. economy grew at a solid 4.1 percent annual rate from July through September, the fastest pace since late 2011 and significantly higher than previously thought. Much of the upward revision came from stronger consumer spending.

The Commerce Department’s final look at growth in the summer was up from a previous estimate of 3.6 percent. Four-fifths of the revision in the report released Friday came from stronger consumer spending, mainly in the area of health care.

The 4.1 percent annual growth rate in the third quarter, as measured by the gross domestic product, came after the economy had expanded at a 2.5 percent rate in the second quarter. Much of the acceleration reflected a buildup in business stockpiles.

On Friday, President Barack Obama pointed to the upward revision to GDP growth as one of several signs of improvement in the economy. They include four straight months of solid job growth and a drop in the unemployment rate to its lowest point in five years.

“What it adds up to is we head into next year with an economy that’s stronger than it was when we started the year,” Obama said at a White House news conference. “I firmly believe that 2014 can be a breakthrough year for America.”

The GDP report also gave a boost to Wall Street. The Dow Jones industrial average was up about 80 points in late afternoon trading.

Economists still expect growth to slow a bit in the current October-December quarter. In part, that’s because two-fifths of the third-quarter gain in GDP came from a buildup in business stockpiles. That gain isn’t likely to be repeated in the fourth quarter. Many analysts think growth will slow to an annual rate between 2.5 percent and 3 percent this quarter before picking up next year.

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