Economy gets a boost ahead of key holiday period

WASHINGTON - The U.S. economy grew at a solid 3.9 percent annual rate in the July-September period, even faster than first reported, giving the country its strongest back-to-back quarters of growth in more than a decade.

The Commerce Department says the third quarter growth rate climbed from an initial estimate of 3.5 percent because of greater spending by consumers and businesses. The figure followed a 4.6 percent surge in the spring, which resulted in the biggest consecutive quarters of growth since 2003.

"The large upward revision to third-quarter GDP growth was a pleasant surprise, and the U.S. economy is growing at an above-trend pace, absorbing the slack still left in the economy after the Great Recession," said Gus Faucher, senior economist with PNC Financial Services Group, in a client note.

Ian Shepherdson, chief economist with Pantheon Macroeconomics, said the economy has accelerated in recent months, propelled by businesses building their inventories, a pick-up in capital spending and growth in personal consumption.

While the economy is expanding, it's hardly booming, notes Peter Boockvar, chief market analyst with The Lindsey Group. Economists expect GDP growth for the full year of about 2.25 percent, up slightly from 2.2 percent in 2013 and and down from 2.3 percent the previous year.

Analysts believe growth could accelerate in 2015. They expect growth of around 3 percent, representing a sustained acceleration in activity six years after the Great Recession.