Economic expansion withstands hurricanes

WASHINGTON — Hurricanes Katrina and Rita haven't blown the economy off course.

Economic growth clocked in at a surprisingly strong 3.8 percent pace in the third quarter, reflecting brisk spending by consumers and businesses despite high energy prices.

The latest picture of the country's economic standing, released by the Commerce Department on Friday, showed a performance even better than the 3.3 percent growth rate from April through June.

The hurricanes' impact on the economy seems so far to be less penetrating than the immense toll on people and their livelihoods.

Analysts said the economic expansion continues firmly rooted.

"The economy bulled its way forward during the summer, and not even the destruction of a major city and other Gulf Coast communities could slow it down," said Joel Naroff, president of Naroff Economic Advisors.

On Wall Street, release of the gross domestic product report sparked a rally. The Dow Jones industrial average jumped 172.82, or 1.69 percent, to 10,402.77, its biggest one-day gain since April 21.

Broader stock indicators were also higher. The Standard & Poor's 500 index gained 19.51, or 1.65 percent, to 1,198.41, and the Nasdaq composite index climbed 26.07, or 1.26 percent, to 2,089.88.

For the week, the Dow added 1.84 percent, the S&P 500 rose 1.6 percent and the Nasdaq finished 0.37 percent higher.

The GDP expansion from July through September topped the 3.6 percent growth rate that many analysts had forecast. GDP, which measures the value of all goods and services produced in the United States, is the best gauge of economic fitness.

Analysts said the rate might have topped 4 percent if the hurricanes had bypassed the U.S.

Despite the strong performance, many people have a grim view of the economic outlook, illustrated by a decline in consumer confidence.

Katrina, the costliest natural disaster in U.S. history, struck in late August; Rita hit in late September. Both hurricanes destroyed businesses and homes and choked the flow of trade. They also hobbled oil and gas facilities, driving energy prices higher and fanning fears of inflation.