LOS ANGELES, CA (Catholic Online) - Growth in the third quarter was substantially better than the 1.3 percent gain in the second quarter and the 0.9 percent rate of growth for the first half of 2011. The data suggests that that the U.S. economy kept chugging along, in spite of volatile financial markets, deepening fears about a possible economic collapse in Europe and a U.S. debt downgrade.

The one thing resolved from the later figures is ff there is to be a dip back into recession -- it did not start in the third quarter.

However, the GDP was not strong enough to represent a "catch-up" effect that could bring the unemployment rate down substantially over time. The figure of 2.5 percent is somewhere around the treading-water rate of U.S. economic growth, which is not enough to put many of the 14 million unemployed Americans back on the payroll.

Another positive sign that the economy is not falling into recession is the number of new people claiming unemployment insurance benefits declined last week, to 402,000 from a revised 404,000 the previous week.

Growth was aided by several industries rebounding from misfortune that occurred at the beginning of the year. For example, the automobile supply chains that had been disrupted by the Japanese earthquake in the spring reopened, and oil prices moderated after spiking early in the year.

Overall, the new report was generally more favorable than expected. Spending by American consumers rose at a 2.4 percent annual rate, which is better than analysts had forecast. In spite of low consumer confidence, Americans are apparently still going to stores.

"Modest growth, no recession, still a slow-paced recovery but recovery nonetheless," John Silvia, chief economist of Wells Fargo wrote in an e-mail.

Business investment was also a source of particular strength: Spending on equipment and software rose at a rate of 17.4 percent, and spending on structures such as office buildings and factories rose at rate of 13.3.

Government remained a drag on growth. Steep budget cuts by municipalities around the country led spending by state and local governments to fall at a 1.3 percent annual rate. State and local governments have subtracted from overall economic activity in 10 of the past 12 quarters.

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