A surge in government spending and strong consumer spending increased growth in the US economy during the third quarter to 2%. But the latest gross domestic product (GDP) report also indicates the economy may slow once again over the next few months.
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GDP has increased for thirteen consecutive quarters, over all but the first few months of the current administration.
Most economists point to the temporary nature of government spending as the catalyst for renewed decline as upcoming spending cuts take hold at the beginning of 2013.
The report also showed a drop in exports. This was the first contraction in exports
in three years. Spending by consumers could also slow after the November 6 election as they turn their attention to the fiscal cliff.
The improved GDP numbers did not improve investor confidence. Investors were surprised by disappointing earnings reports from many companies in the third quarter.
As well, government report figures are often revised in subsequent months.