The US economy shook off the effect of hurricanes Katrina and Rita to grow at 3.8% in the third quarter, according to the US Commerce Department.
Strong spending by consumers and by the government helped to boost the increase in gross domestic product, a measure of all goods and services produced within US borders. In the second quarter, GDP growth was only 3.3%.
The US Commerce Department said it could not separate the economic effects of the twin hurricanes that struck the US in late August and September, though it estimated a cost of $40 billion in lost wages and rents.
Wall Street economists had forecast that GDP would advance at a 3.6% in the third quarter, the tenth consecutive quarter in which it has grown at a rate greater than 3%.
Despite surging prices at the petrol pumps, the report showed that core inflation - which exempts food and energy from its calculation - declined in the third quarter. Third quarter inflation ran at 1.3%, down from 1.7% in the second quarter.
The report will reduce pressures for interest rate increases. Federal Reserve policymakers have pushed US interest rates up 11 times since mid-2004, to keep a rein on prices. The Fed is scheduled to meet again on Tuesday and is widely expected to nudge rates up 0.25%.
In another report, the Labor Department reported that its Employment Cost Index showed a 0.8% advance in the third quarter that was slightly ahead of the second quarter's 0.7%.
