By Arun Kumar
Washington, Oct 29 (IANS) For the first time in a year, the US economy grew at a 3.5 percent annual rate in the third quarter, ending a string of declines and raising hopes of a faster rebound from its worst downturn in years.

The slightly stronger than expected GDP growth, reported by the commerce department Thursday, was one more sign that the economy has likely pulled out of the deep recession that started in December 2007.

Economists surveyed by Briefing.com had forecast 3.2 percent growth in gross domestic product, the broadest measure of the nation’s economic activity. The economy shrank at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.

The new GDP reading by itself does not mark an end to the recession; the economy actually grew in the second quarter of 2008, analysts said, noting the National Bureau of Economic Research, which officially dates the beginning and end of recessions, is not expected to declare until sometime in 2010 that the current recession has ended.

But the stronger-than-expected growth is likely to lead more economists to declare that the economy hit bottom earlier this year and turned higher at some point in the summer, CNN said.

Robust government spending, exports, consumer durables - buoyed by auto purchases, Congress’s now-expired “Cash for Clunkers” programme - and housing helped finally push the GDP measure into positive territory.

Thursday’s report also shows consumer spending on non-durable goods like food and clothing increased just two percent in the third quarter of this year with the poor job market discouraging Americans from increasing their spending by too much.

Likewise, stagnant consumer demand and withering consumer confidence have left companies wary of hiring more employees - or, for that matter, taking any expensive risks.

The jobless rate reached 9.8 percent in September, its highest rate in 26 years and business investment in structures fell nine percent in the third quarter, the report noted.

Inventory rebuilding was one bright spot in the report, indicating businesses may rev up activity in the coming months to replenish stockroom shelves. Stock futures rose nearly one percent on the news.