The US economy grew at a 2.7% annual rate in the three months from July to September, much faster than first thought.
But analysts warned that the strength may fade in the final months of 2012 if Congress and the Obama administration fail to reach a budget deal.
The Commerce Department said that growth in the third quarter was significantly better than the 2% rate estimated a month ago.
It was also more than twice the 1.3% rate reported for the April-June quarter.
The two biggest factors in the upward revision were larger gains in business stockpiles and a boost in export sales. That offset weaker consumer spending.
Still, most economists say growth has slowed since then to below 2% in the October-December quarter. That is generally considered too weak to rapidly lower the unemployment rate.
Economists cite two reasons for the anticipated weakness. Superstorm Sandy halted business activity along the East Coast in late October and November.
And many businesses and consumers could end up scaling back on spending in the final weeks of the year, if lawmakers and US President Barack Obama fail to avert the "fiscal cliff" - the sharp tax increases and spending cuts that would occur in January without a deal.
So far, many reports suggest economic activity picked up early in the fourth quarter. And if Congress and the White House reach agreement and avoid the fiscal cliff, economic growth could accelerate next year, many economists say.
A Federal Reserve survey released earlier this week showed improved consumer spending and steady home sales helped lift growth from October through early November in most parts of the US. The one exception was the Northeast, where the storm led to widespread disruptions.
The Labor Department said employers added 171,000 jobs last month and hiring in September and August was stronger than previously thought. Rising home values, more hiring and lower gas prices pushed consumer confidence in November to the highest level in nearly five years, according to the Conference Board.
A better mood among consumers appears to have encouraged businesses to invest more in October after pulling back over the summer. There are already signs that consumer optimism is leading to more spending. A record number of Americans visited stores and shopping websites over the four-day Thanksgiving weekend, according to a survey by the National Retail Federation.
Applications for US jobless aid fall to 393,000
The number of Americans seeking unemployment benefits fell 23,000 to a seasonally adjusted 393,000 last week. It was the second drop in a row after Superstorm Sandy had driven applications much higher earlier this month.
A Labor Department analyst said the storm had little effect on the data. Applications spiked to 451,000 three weeks ago after Sandy battered the US east coast, closing businesses in the Northeast and cutting off power to 8 million homes in 10 states.
People can claim unemployment benefits if their workplaces are forced to close and they are not paid.
The four-week average of applications, a less volatile measure, rose to 405,250. That figure has been elevated by the storm. Before Sandy, applications fluctuated between 360,000 and 390,000 this year.
