World and Nation

U.S. Economy Grew in 3rd Quarter, First Time in a Year

The United States has emerged from the longest economic contraction since World War II.

The nation’s gross domestic product expanded at an annual rate of 3.5 percent in the quarter that ended in September, matching its average growth rate of the last 80 years, according to the Commerce Department. But government programs to encourage consumer spending on things like cars and houses are expiring, and employers remain reluctant to hire more workers, suggesting the recovery may not last, economists say.

For most people, the recovery will not feel real until jobs are more plentiful and the housing market improves. Jobs may still be hard to find well into 2010, economists say. A government report to be released next week is expected to show that unemployment rose again this month.

Before the third quarter, gross domestic product — the broadest measure of the government’s total goods and services produced — had been shrinking for a year. It bottomed out with a 6.4 percent rate of decline in the first three months of this year, the steepest fall since 1982.

The trend was halted last quarter primarily because of consumers, who drove most of the economic gains.

The government’s cash-for-clunkers program spurred consumers to spend more on durable goods, orders of which grew at an annual rate of 22.3 percent in the third quarter after a decline in the previous quarter. Similarly, the $8,000 federal tax credit for first-time home buyers helped revive housing sales, which rose at an annual rate of 23.4 percent in the third quarter. Housing sales had actually fallen by a comparable amount in the previous three months.

The $787 billion stimulus package is also credited with strengthening economic activity, although the precise contribution is contested.

Many economists worry that the effects of these government initiatives will be short-lived and that the next few quarters may show sluggish growth or even a second dip downward.

Initial jobless claims fell by 1,000 in the latest week, to 530,000, according to a Labor Department report released Thursday.

Economists said that companies were using up inventories more slowly and that this might mean businesses are anticipating more demand, and are keeping more stock on hand.

A slower drawdown in inventories might also spur economic activity in the coming months.