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The US economy has grown at its fastest pace in a year in the third quarter, with consumers and businesses stepping up spending and creating momentum that could carry into the final three months of the year.

The expansion was a welcome relief for an economy that looked on the brink of recession just weeks ago, although part of the pick-up came from a reversal of factors that held back growth earlier in the year, and analysts are worried about 2012.

US gross domestic product grew at a 2.5 per cent annual rate in the third quarter, up from a 1.3 per cent pace in the
prior three months, the commerce department said on Thursday. That was almost double the rate of the previous quarter and took output back to pre-recession level.

While the growth pace matched economists' forecasts, domestic demand showed a bit more vigour than most had
expected.

Consumer spending increased, growing at a 2.4 per cent rate in the third quarter, the strongest since the fourth quarter of 2010, while business investment spending shot up at a 16.3 per cent pace, the most in more than a year.

However, the US labour market is still weak.

Analysts have said the rate of economic growth may not be high or fast enough to see a drop in unemployment.

High unemployment

There is high unemployment and small business owners are worried about their future, Al Jazeera's Cath Turner reported from New Jersey.

"Unskilled labourers were hit hardest by the recession and still have few job prospects," she said.

"Small business owners are still at the mercy of forces well beyond their contro."

She said that despite the appeals of President Barack Obama, his $447bn American Jobs Act remains stalled in congress.

Thursday's economic report could give some breathing space for Federal Reserve policymakers who meet next week to debate additional ways to help the economy and lower an unemployment rate that has been stubbornly stuck above 9 per cent for five months.

The US economy needs to grow at a rate of more than 2.5 per cent over a sustained period to cut the jobless rate.

Source: Al Jazeera and agencies