Increased consumer spending and stronger sales of American goods abroad helped the U.S. economy grow 2.5 percent between July and September, the U.S. Department of Commerce said Tuesday.
That's slightly faster growth than the 2 percent that the Commerce Department previously estimated for the third quarter, and the strength surprised some economists. The flip side is that millions of Americans are out of work, and the U.S. unemployment rate remains stuck at 9.6 percent.
Economic analysis usually indicates GDP growth must be above 3 percent to create jobs in enough numbers to lower the overall jobless situation.
Analysts initially predicted the economy would expand at an annual rate of 2.3 percent in the July-September quarter. The revised Commerce Department report reflects an increase in consumer spending, boost in foreign spending on U.S. goods, and more investment activity from businesses.
"The economy does have good forward momentum," John Sylvia, chief economist for Wells-Fargo Bank in Charlotte, said in a Marketplace Morning Report interview Tuesday.
Consumer spending accounts for more than two-thirds of U.S. economic activity. It grew to a rate of 2.8 percent in the third quarter, up from the 2.6 percent previously estimated and faster than the 2.2 percent pace set in the second quarter.
Still, much more momentum is needed to force down the unemployment rate. Some estimate the economy would need to grow by 5 percent for a full year to push down the unemployment rate by a full percentage point.
"So who continues to spend to help the economy grow? It's the rich and the government," said Juli Neiman, an analyst at Smith Moore and Company.
In other news today, the Federal Reserve is scheduled to release minutes of its closed-door deliberations from earlier this month, and give updated economic projections. Those minutes could reveal details behind the Fed's controversial decision to buy $600 billion worth of government bonds.