WASHINGTON (CN) - The nation's economy grew at an annual rate of 3.5 percent in the third quarter, signaling the end of the worst recession in 70 years, the Bureau of Economic Analysis announced today. The growth, fueled by auto sales and government and consumer spending, was the strongest in two years.
"Today's numbers indicate that the tough decisions this administration made to rescue the economy from the abyss were correct," Commerce Secretary Gary Locke said. "We're headed in the right direction."
The July-September growth marks a turnaround from the previous four quarters, when gross domestic product shrank
It has been two years since an increase of equal magnitude was seen. The economy last grew in April-June of 2008, when it expanded by an annual rate of 1.5 percent.
During the previous quarters, the economy shrank by 2.7 percent, 5.4 percent, 6.4 percent and 0.7 percent from earliest to most recent.
The Obama administration is largely crediting the Recovery Act for the upturn. "The American Recovery and Reinvestment Act of 2009 contributed between 3 and 4 percentage points to real GDP growth in the third quarter," Council of Economic Advisors Chair Christina Romer said. "This suggests that in the absence of the Recovery Act, real GDP would have risen little, if at all, this past quarter."
Republicans were quick to remind Americans during a press conference that the Recovery Act has not been able to turn around continuing job losses. Unemployment was last estimated at 9.8 percent.
The government estimates that just under half of the growth stemmed from vehicle sales, which were boosted by the "cash for clunkers" program that began in July and is scheduled to end in November.
The bureau also pointed to increases in consumer spending, exports, private investment and federal government spending. The growth was offset by more imports, less state and local government spending, and a slow-down in federal government spending.
Prices increased by 1.6 percent in the third quarter, which includes the months of July, August and September.
After the announcement, stock values rose.
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