The Commerce Department issued its first estimate of GDP growth for the third quarter this morning, and the news was a bit better than expected. Our economy grew at 2 percent for the quarter, slightly ahead of the consensus expectation of 1.8 percent, and up from 1.3 percent in the second quarter.
Consumer spending was a key driver of the increase: Real personal consumption expenditures were up by 2 percent, after having risen just 1.2 percent in the prior quarter. And government spending was up by a surprising 3.7 percent, mostly as a result of increased defense spending, after it had dropped by 0.2 percent in the second quarter.
There were a couple of weak signs as well. Overall business investment softened somewhat, as did nonresidential business investment. Exports were also a problem, dropping by 1.6 percent from the previous quarter.
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