Official figures show that the US economy grew at its fastest pace for a year in the third quarter of this year as consumers and businesses stepped up spending.
Though part of the increase came from the reversal of temporary factors that had restrained growth, the expansion was a welcome relief for an economy that looked on the brink of recession just weeks ago.
US gross domestic product expanded at a 2.5% annual rate in the third quarter, the Commerce Department said in its first estimate. That was a big acceleration from 1.3% in the second quarter and matched economists' expectations.
Consumer spending in the last quarter was the strongest since the fourth quarter of 2010, while business investment spending was the fastest in more than a year.
A jump in petrol prices had affected consumer spending earlier in the year, and supply disruptions from Japan's earthquake had curbed auto production. Motor vehicle output has surged as those supply constraints have eased.
In addition, car sales, which were held back by the lack of popular models, have also shown renewed strength.
As a result, consumer spending, which accounts for about 70% of US economic activity, grew at a 2.4% rate after slowing to a 0.7% pace in the second quarter.
Business spending rose at a 16.3% pace as companies splurged on equipment and software, and invested in non-residential structures.
Inventories rose only $5.4 billion in the third quarter, the smallest gain since the fourth quarter of 2009, after increasing $39.1 billion in the second quarter.
Excluding the drag from inventories, the economy grew at a 3.6% pace - pointing to underlying strength in domestic demand - after expanding 1.6% in the April-June period.
Apart from consumer and business spending, growth in the third quarter was also supported by a smaller US trade deficit.
Spending on residential construction rose at a modest 2.4% pace after growing at a 4.2% rate in the second quarter. Government spending was flat, reflecting continued budget cuts by state and local governments. However, the pace of decline in state and local government spending is moderating.
The GDP report also showed a moderation in inflation pressures, with the personal consumption price index (PCE) rising at a 2.4% rate in the third quarter, slowing from the April-June quarter's 3.3% pace. Core PCE, which excludes food and energy, rose at a 2.1% rate after increasing 2.3% in the second quarter.
Separate figures, however, show that the US jobs market is showing little improvement. Data from the Labor Department showed new claims for state unemployment benefits fell by just 2,000 last week to 402,000.
