Economy grew at 3.1% during summer, consumer buying pace is fastest since '09

WASHINGTON — The U.S. economy grew at an annual rate of 3.1 percent over the summer as exports increased, consumers spent more and state and local governments added to growth for the first time in three years. But the economy is likely slowing in the current quarter.

The Commerce Department's third and final estimate Thursday of growth for the July-September quarter was revised up from its previous estimate of a 2.7 percent annual growth rate.

Growth in the third quarter was more than twice the 1.3 percent growth rate in the April-June quarter. But disruptions from superstorm Sandy and uncertainty weighing on consumers and businesses from the "fiscal cliff" are likely holding back growth in the October-December quarter. Many analysts predict an annual growth rate of just 1.5 percent for this quarter.

Robert Kavcic, an economist at BMO Capital Markets, said the upward revision to third-quarter growth didn't change his view that the economy is slowing in the current quarter to an annual growth rate below 2 percent. Kavcic said a temporary jump in defense spending and business stockpiling in the July-September period is likely being reversed this quarter.

Many economists expect little improvement for January-March. The latest forecast from economists for the National Association of Business Economics is for an annual growth rate of just 1.8 percent in the first quarter of 2013. Growth at that level is considered too weak to significantly lower the unemployment rate, which was 7.7 percent in November.