NATION Economy rises 8.2 percent, largest growth in 20 years

Third-quarter business growth is the best performance in nearly 20 years.
WASHINGTON (AP) -- The U.S. economy, propelled by tax cuts and low interest rates, roared ahead at an 8.2 percent annual rate in the third quarter, the best showing in nearly 20 years, while Americans' incomes and spending both showed healthy gains in November.
The government reports today on the gross domestic product, the country's broadest measure of economic health, and personal incomes and spending provided further evidence that the economy was convincingly shaking off a prolonged period of lethargy and beginning to fire on all cylinders.
The Commerce Department report that the GDP grew at an 8.2 percent rate in the third quarter, propelled by a surge in consumer spending, was identical to the preliminary estimate made a month ago and represented the strongest growth since an 8.4 percent rate of increase in the fourth quarter of 1983.
In a separate report, the government said consumers were remaining active in the current quarter with consumer spending rising by 0.4 percent in November, the best showing since August, and incomes, helped by rising employment levels, posting an increase of 0.5 percent last month, the best gain since May.
Many analysts believe that GDP growth in the current quarter could well top 5 percent, representing the best back-to-back growth rates since the boom years of the 1990s.
Reasons for growth
The economy began the year growing at much slower rates of 2 percent in the first quarter and 3.1 percent in the second quarter before the jolt from a new round of tax cuts propelled consumer spending in the third quarter.
Growth has also been helped this year by the Federal Reserve's decision to keep a key interest rate at the lowest level in 45 years, providing strength to such interest rate-sensitive sectors as housing and auto sales.
All of the GDP figures released today reflected a comprehensive revision that the government does every five years to make sure the measurement of total output keeps up with the times. With the changes, the GDP grew by 2.2 percent for all of 2002, down slightly from the previous estimate of 2.4 percent.
Even with the strong growth, inflation remained under control with a price gauge tied to the GDP rising at an annual rate of just 1.8 percent in the third quarter.