The U.S. economy expanded at a pace of 3.1 percent in the third quarter, according to revised data released Thursday by the U.S. Commerce Department.
The growth in third quarter real GDP — the total economic output of the U.S. economy — has been revised up steadily since earlier this year. Today's 3.1 percent is more than full percentage point higher than the initial assessment of the economy by the Bureau of Economic Analysis. A second revision also pushed the number higher, to 2.7 percent.
In a nearly $16 trillion economy, there's a major difference between growing at 2 percent and growing at over 3 percent.
Economists have recently argued that 2 percent U.S. GDP growth could be a new normal for the economy as it emerges from the Great Recession. Historically, the economy has grown at a faster rate. But last year, it expanded at only a 1.7 percent annual pace, and since the financial crisis, it hasn't seen quarters in which GDP has grown at the typically 5-6 percent pace a recovering economy usually enjoys.
This has translated into weak job growth and, nationally and in California, has kept the unemployment rate stubbornly high. In the U.S., it currently stands at 7.7 percent, while in California, it's still in double digits, at 10.1 percent. Worse, it's discouraged workers from looking for a job, taking the labor participation rate down to levels not seen since the early 1980.
The BEA attributed a decent portion of the GDP uptick to increased consumer spending, or "personal consumption expenditures." This is important because in the U.S., the consumer makes up 70 percent of all economic activity. In the third quarter, the consumer particpated a bit more and made a bigger contribution ot GDP growth.
For what it's worth, given all the discussion about how the U.S. can only expect relatively weak, 2-percent level growth going forward, cracking through the 3 percent threshold in the third quarter has some psychological significance.
But the momentum may not be be sustained in the fourth quarter, which in 2011 came in at a respectable 4 percent, before giving way to subpar growth in the first quarter if 2012. That's been a grim theme in the recovery: good GDP growth at the end of the year, spurring optimism, only to see that optimism dashed in the new year.