The US economy grew at a moderate pace last summer, reflecting stronger spending by businesses to replenish stockpiles. More recent barometers suggest the economy is gaining momentum in the final months of the year. Gross domestic product increased at a 2.6% annual rate in the July-September quarter, the Commerce Department said today. That's up from the 2.5% pace estimated a month ago, and from the feeble 1.7% in the second quarter.
While businesses spent more to build inventories, consumers spent a bit less. Many analysts predict the economy strengthened in the October-December quarter. They think the economy is growing at a 3.5% pace or better mainly because consumers are spending more freely again. And expectations are even higher for 2011: A payroll tax cut signed into law this month by President Obama will put more money in consumers’ pockets. (Read more economy stories.)