Economy grows during third quarter

The U.S. economy grew during the third quarter by 2%, which was higher than economists had predicted. The growth was propelled by the rise in consumer spending, an increase in government spending on defense and more home construction.

Economists had predicted the economy would grow by 1.8% on an annualized basis, but the gross domestic product was up by 2%. During the second quarter, between April and June, the rate of the GDP increase was 1.3%. The gross domestic product is the value of services and goods that are produced in the economy.

A Wall Street economist said the report was encouraging as both consumer spending and housing construction was on the increase. Those two sectors would also be dominant themes during the last three months of 2012 as well.

Consumer confidence in October also increased to a five year high indicated another report that was released on Friday. That report suggested that spending increases might be sustainable as there has been a boost in household finances thanks to the revival of the housing market.

Consumer sentiment ended the month at 82.6 and that was the highest it has been since September of 2007.

The GDP for the quarter had been projected to be anywhere from 0.9% to 3.1%. On Friday, the information regarding the GDP was the first of three that will be released. The other two will be released in November and December due to additional information that will be received to finalize the exact figures.

Consumer purchases, which represent more than 70% of the world’s largest economy increased by 2% during the quarter, which was up from the 1.5% mark of the second quarter.