The nation's total output of goods and services jumped by an unexpected 1.8 percent in the third quarter on strong consumer purchases of cars, vans and trucks, the Commerce Department said Tuesday.
Private economists expected an increase of only 0.8 percent in the government's initial estimate of the real gross national product during July, August and September as recession fears swept the nation.The $18.5 billion surge in the real GNP for the third quarter, adjusted for inflation, follows a 0.4 percent, or $4.5 billion, gain in the second quarter, according to the department's Economics and Statistics Administration.
In the first quarter, the real GNP was up 1.7 percent.
Two or more consecutive quarters of negative growth in the real GNP indicate the economy has slipped into recession. An advance of less than 1 percent is generally considered a weak showing.
But the data is subject to change. The Commerce Department will revise the numbers in November and release a final estimate in December.
Two gauges of inflation tied to the report indicated a mixed picture in the aftermath of Iraq's Aug. 2 invasion of Kuwait - and the worldwide ballooning of oil prices.
Consumer spending leaped to $23.9 billion, not counting inflation, in the third quarter from $1.5 billion in the second quarter.
Spending on durable goods - expensive items made to last three or more years - climbed to $3.2 billion in July, August and September from a decline of $10.8 billion in April, May and June.
A Commerce Department spokesman attributed the bulk of the increase to automotive purchases, which were up $3.4 billion in the third quarter vs. down $6.1 billion in the second quarter.
Spending on non-durable goods increased to $3.8 billion from a decline of $4.4 billion, and spending on services increased slightly to $16.9 billion during the last quarter, the government said.
Exports regained lost strength in the third quarter, up $1.9 billion vs. down $8 billion, while imports increased to $9.8 billion from $1.2 billion in the second quarter, another sign of strong consumer spending.
Business investment, meanwhile, increased by $9.2 billion in the third quarter after falling $6.2 billion, and government spending slowed to $2.6 billion from $12.3 billion in the second quarter.
Military spending was not a significant factor despite the Iraq crisis.
The total GNP, the broadest measure of the nation's economic activity, was growing at an annual rate of $4.17 trillion in the third quarter, when adjusted for inflation. That was a gain of $18.5 billion over the second quarter.