Our latest calculations suggest that GDP growth accelerated to 3.2% annualised in the third quarter, more than double the rate in the second. The rebound in spending on motor vehicles as the Japanese-related supply disruptions faded explains some of the pick up. It was apparently more broad-based than that, however, with investment, exports and Federal government spending all putting in surprisingly strong performances. At first glance, the pick up in GDP growth would appear to make a mockery of fears that the economy is headed for another recession. But much of the strength appears to be temporary and we expect growth to slow markedly over the next couple of quarters. Even if the economy doesn't contract, growth will remain unusually lacklustre next year.
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