The Commerce Department reported today that the U.S. economy expanded at an annual rate of 3.5% in the third quarter, the LA Times reported.
"This is in stark contrast to the decline of 6.4% annual rate just two quarters ago," Christina Romer, who heads the White House Council of Economic Advisors, told the Times.
The report broke four straight quarters of economic contraction and was driven largely by a rebound in consumer spending supported by the federal stimulus package and improved business spending that included a revival of home building, the Times reported.
The American Recovery and Reinvestment Act contributed 3 to 4 percentage points to real GDP growth in the third quarter, Romer told the Times, "This suggests that in the absence of the Recovery Act, real GDP would have risen little, if at all, this past quarter."
"After four consecutive quarters of decline, positive GDP growth is an encouraging sign that the U.S. economy is moving in the right direction," Romer said. "However, this welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered.
"I don't see a rosy picture," Peter Morici, an economics professor at the University of Maryland, told the times. The economy needed to have an annual growth rate of 3% or more over at least three quarters to add enough jobs to bring down unemployment.
"It will take sustained, robust GDP growth to bring the unemployment rate down substantially," Romer said in a statement issued by the White House. "Such a decline in unemployment is, of course, what we are all working to achieve."
"All things considered, this was a very good report, and suggests that the U.S. economy has finally shaken off the shackles of the deep economic recession and is beginning the economic recovery process," Millan Mulraine, economics strategist for TD Securities, told Forbes
"While it's far too early to declare ‘mission accomplished,’ it is crystal clear that the Recovery Act was crucial in pulling the economy out of its tailspin and putting it on the path to growth," Josh Bivens, an economist at the Economic Policy Institute that has fervently defended the benefits of economic stimulus, told Forbes, citing the stimulus as a major contributor to the growth.
But the primary promise of the stimulus – job creation – has yet to be realized. While 3.5% is positive growth, it is not a boom, Forbes reported.
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