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U.S. Economy Expands at 3.5 Percent Clip in Third Quarter

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A smaller trade deficit and a surge in defense spending buoyed U.S. economic growth in the third quarter, but other details of Thursday's report hinted at some loss of momentum in activity. Gross domestic product grew at a 3.5 percent annual rate, the Commerce Department said on Thursday, beating economists' expectations for a 3.0 percent pace.

While the pace of growth in business investment, housing and consumer spending slowed from the second quarter, all those categories contributed to growth. Despite decelerating from the fourth quarter's brisk 4.6 percent pace, it was the fourth quarter out of five that the economy has expanded at or above a 3.5 percent clip. The data came one day after the Federal Reserve ended its asset purchasing program. Fed officials said there was sufficient underlying strength in the broader economy. The report was the first of three estimates of the gross domestic product, the economy's total output of goods and services. Analysts believe the economy is maintaining momentum in the current quarter, with a big fall in gas prices expected to bolster consumer spending. After the roller-coaster first- and second-quarter gyrations, the economy is poised to achieve consistently stronger growth for the rest of this year and all of 2015.

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-- Reuters and The Associated Press

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