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Third-quarter GDP rises 2%, better than expected
Tim Mullaney, USA TODAYShare
Story Highlights
* Report shows more evidence of recovery's slow pace
* Consumer spending, improving housingmarket aid growth
* Business investment flat, keeps job creation down
9:08AM EDT October 26. 2012 - The nation's gross domestic product grew at an annual rate of 2% during the third quarter, thegovernment said today, in one of the final pre-election looks at how the economy is recovering from the recession.
The results beat the 1.8% median forecast of 48 economists surveyed by USA TODAY.But although third-quarter GDP beat expectations, growth is still well below the annual pace of 3% or better that economists consider necessary to create a strong economy and lower the unemploymentrate.
Consumer spending, which has the biggest impact on economic growth, rose 2% last quarter after rising 1.3% in the second quarter. And investment in housing jumped 14.4% to help lead the way.Indeed, housing accounted for all of the economy's gains in investment during trhe quarter -- and then some.
Story: Economists forecast 2013 economy
"The quick reaction is that the economy is slowlygetting better,'' said Joel Naroff, president of Naroff Economic Advisors. "It has turned the corner in so many different ways.''
A sharp 1.6% decline in exports and a drop in business investment,excluding housing, held back growth. Investment in business equipment and software fell 1.3%, after a disappointing 0.4% gain in the second quarter that economists blamed on fears of a post-election impassein Washington over tax and spending policies set to take effect Jan. 1.
Uncertainty about which combination of austerity measures Washington may choose, and the chance that officials may hit animpasse similar to last year's fight over raising the debt ceiling, is making businesses delay purchases of buildings, equipment and software, Naroff said.

"If there was a normal investment number,...