The US economy grew at an annual rate of 3.1% during the three months from July to September, new figures show.
US consumers spent more and state and local governments added to growth for the first time in nearly three years. But the economy is likely slowing in the current quarter.
The Commerce Department's third and final estimate of growth for the July-September quarter was revised up from its previous estimate of a 2.7% annual growth rate.
Growth in the third quarter was more than twice the 1.3% growth rate in the April-June quarter.
But disruptions from superstorm Sandy in the northeast, and uncertainty over the January 1 "fiscal cliff" of tax increases and deep spending cuts are likely holding back growth in the October-December quarter.
Many analysts predict an annual growth rate of just 1.5% for this quarter.
They are also not expecting much improvement in the January-March quarter.
The latest forecast from 48 top economists for the National Association of Business Economics is for first-quarter growth of just 1.8%. Growth at that level is considered too weak to significantly lower the unemployment rate, which was 7.7% in November.
But if Congress and the White House reach agreement to avoid the fiscal cliff, economic growth could accelerate next year, many economists, including Federal Reserve Chairman Ben Bernanke, have said.
The Fed last week said it plans to keep a key interest rate at a record low as long as unemployment remains above 6.5%. And it forecast that unemployment would stay that high until late 2015.
The US government's final estimate of a 3.1% growth rate for gross domestic product last quarter is a sharp improvement over its initial estimate of a 2% rate - a figure that it later revised up to 2.7% based on a buildup in business stockpiles.
GDP measures the nation's total output of goods and services - from restaurant meals and haircuts to airplanes and appliances. The further upward revision this month reflected stronger consumer spending, which accounts for about 70% of economic activity.
The US government said consumer spending grew at an annual rate of 1.6% in the third quarter, above its previous estimate of 1.4%.
The Commerce Department also revised up its estimate of spending by state and local governments to show a gain of 0.3% - the first quarterly increase in three years. State and local governments had previously been slashing payrolls and other spending in the aftermath of the Great Recession.
Total government spending grew at 3.9% annual rate last quarter, reflecting a surge in defense spending. The NABE forecasting panel has said it expects GDP to grow 2.1% in 2013, little changed from the expected 2.2% expansion this year. That would continue the tepid growth that has persisted since the official end of the recession in mid-2009.
But the NABE panel said it thinks growth will accelerate later in the year as long as Congress and the administration resolve their debate over taxes and government spending. Doing so would remove the uncertainty that, in part, is holding back spending, many economists say.
US unemployment claims end four weeks of decline
Separate figures today show that the number of Americans applying for unemployment benefits rose last week by 17,000, reversing four weeks of declines.
The Labor Department said that a seasonally adjusted 361,000 people sought unemployment aid the week ended December 15, from a revised 344,000 the week before.
But the less volatile four-week moving average fell 13,750 to 367,750, the lowest since late October, suggesting that the job market continues to grow modestly. Applications had surged after Superstorm Sandy, then fallen back.
The drop of the four-week average suggests that companies are cutting fewer jobs, even if they are not hiring enough to lower the unemployment rate significantly.
The US economy has generated an average of 151,000 jobs a month in 2012, not enough to pull the high unemployment down sharply.
