AlQa'dah 29, 1432, Oct 27, 2011, SPA -- The U.S. economy grew modestly over the summer after almost stalling in the first half of the year, lifted by stronger consumer spending and greater business investment, but the labor market remains weak, the government reported Thursday. The Commerce Department said the economy expanded at a 2.5 percent annual rate in the July-September period, the strongest growth in a year and double the 1.3 percent growth rate in the April-June quarter. It also was a big improvement over the weak 0.9 percent growth rate for the first six months of the year. While 2.5 percent growth in gross domestic product (GDP) is enough to ease recession fears, it is far below what is necessary to lower high unemployment, which has been near 9 percent for the past two years. Consumers helped drive much of the third-quarter growth, with spending growing at a 2.4 percent annual rate-more than triple the rate in the spring. Consumer spending was the strongest since the fourth quarter of 2010, and business investment spending jumped 17.4 percent, also nearly triple the rate from the spring. However, business inventories rose only $5.4 billion, the smallest gain since late 2009, after increasing $39.1 billion in the second quarter. Inventories subtracted 1.08 percentage points from GDP growth; excluding the drag from inventories, the economy grew at a 3.6 percent annual pace. Stronger consumer spending and a slower pace of inventory accumulation by businesses will lay a base for a solid fourth quarter, analysts say, but a slowdown in Europe and the exhaustion of U.S. demand could cause a period of weakness in early 2012. A second government report Thursday said the number of Americans seeking unemployment benefits fell slightly last week, but not by enough to suggest that hiring is increasing. The Labor Department said jobless claims declined 2,000 last week to 402,000, the fourth decline in six week. However, the four-week moving average-considered a better indicator of labor-market trends because it is less volatile-rose to 405,500 last week after having fallen to a six-month low two weeks ago. Despite the recent weekly declines in jobless claims, they remain above 400,000, where they have been for most of the time since March. Claims need to fall consistently below 375,000 to signal sustainable job growth, economists say, and claims have not been below that level since February.
