Analysts say the growth is good news, but it is not cause to get too excited just yet. The economy is still underperforming — largely because the country is waiting with bated breath on the fiscal cliff outcome – but it’s not stalling, and that’s good news.
The increase is largely attributed to increases in business inventories and federal spending.
The growth number jibes well with the increasing housing numbers as well. Home prices are improving, the number of bank-owned properties are contracting in certain states and mortgage interest rates are declining.
The fiscal cliff conversation will keep the economy vulnerable if a decision isn’t reached by the January 1 deadline.
“The economy certainly hasn’t taken off, but it’s nowhere close to a stall,” said David Kelly, chief global strategist for JPMorgan Funds told the New York Times. “The economy is still underperforming its full potential, but once we get past the ‘fiscal cliff’ uncertainty, we could see stronger growth next year.”
For more on the increase head to The New York Times.