GDP Up 3.5% in Third Quarter, Government Says

Washington, DC, Oct. 29, 2009--The economy expanded at a 3.5% annual pace in the third quarter, the first increase in real gross domestic product in a year and the strongest growth in two years, the government said.

Along with improvements in key monthly figures on output and sales, the rise in real gross domestic product means the Great Recession is likely over in a technical sense, even as further job losses occur.

The White House cheered the numbers and said the economy is moving in the right direction.

"I anticipate that this is the turnaround, and that the numbers from here on out will be positive," said Council of Economic Advisers Chairwoman Christina Romer in a televised interview.

The massive government stimulus helped drag the economy out of the longest and deepest recession since the 1930s, the Commerce Department said..

Before growing in the June-to-September quarter, the U.S. economy had shrunk for four straight quarters for the first time since the Great Depression.

The 3.5% increase matched estimates of economists.

In the past year, the economy has contracted 2.3%.

Growth was broad-based in the third quarter, with final U.S. sales rising at a 3% annual pace, the fastest in more than three years.

Third-quarter growth was due to higher consumer spending, a slowdown in the reduction of inventories, an increase in residential investments, and robust government spending.

Home building contributed to growth for the first time in nearly four years.

Business investment declined as a small increase in capital spending on equipment and software was overwhelmed by another large drop in investments in structures.