Economy grew 2.5 percent in Q3 as consumers rebound

WASHINGTON (AP) — The U.S. economy grew modestly over the summer after nearly stalling in the first six months of the year, lifted by stronger consumer spending and greater business investment.

The Commerce Department said today that the economy expanded at an annual rate of 2.5 percent in the July-September quarter. That's the stronger growth in a year and nearly double the 1.3 percent growth in the April-June quarter. It's also a vast improvement over the anemic 0.9 percent growth for the entire first half of the year.

While 2.5 percent growth is enough to ease recession fears, it's far below what's needed to lower painfully high unemployment, which has been near 9 percent for the past two years. Analysts project similar growth for the October-December quarter.

Nonetheless, the report on U.S. gross domestic product, or GDP, sketched a more optimistic picture for an economy that only two months ago seemed destined for another recession. And it was delivered on the same day that European leaders announced a deal that marked a turning point in their two-year debt crisis.

Stocks surged on the European deal and maintained their gains after the report on U.S. growth was released.