The Commerce Department's second estimate of growth last quarter yielded a mild surprise - the economy grew at only a 2.0% rate instead of 2.5% as originally estimated. This is marginally better than the anemic 1.3% seen in the second quarter. And other indices show that growth in the 4th quarter might top 3% for the first time since 2009.
Data so far suggest the fourth-quarter growth pace could exceed 3 percent, which would be the fastest in 18 months.
Despite the downward revision, last quarter's growth is still a step-up from the April-June period's 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year.
A jump in gasoline prices had weighed on consumer spending earlier in the year, and supply disruptions from Japan's big earthquake and tsunami in March had curbed auto production.
The government revised third-quarter output to account for an $8.5 billion drop in business inventories, which lopped off 1.55 percentage points from GDP growth. Inventories had previously been estimated to have increased $5.4 billion.
The drag from inventories was offset by strong export growth. Excluding inventories, the economy grew at an unrevised brisk 3.6 percent pace after expanding 1.6 percent in the second quarter.
Consumer spending was revised slightly down to a 2.3 percent growth pace from 2.4 percent because of adjustments to motor vehicle fuels and lubricants. It was still the quickest pace since the fourth quarter of 2010. However, weak income growth could crimp spending. The report showed real disposable income fell 2.1 percent in the third quarter after declining 0.5 percent in the prior three months.
Another mixed bag of signals. Three percent growth would be very nice if it could be maintained. But it is far below what we might expect coming out of a long and deep recession.