U.S. economy expands at 4.1 percent rate

The U.S. economy grew at a solid 4.1 percent annual rate from July through September, the fastest pace since late 2011 and significantly higher than previously thought.

Much of the upward revision came from stronger consumer spending.

The Commerce Department's final look at growth in the summer was up from a previous estimate of 3.6 percent. Four-fifths of the revision in the report released Friday came from stronger consumer spending, mainly in the area of health care.

Economists still expect growth to slow a bit in the current October-December quarter. In part, that's because two-fifths of the third-quarter gain in GDP came from a buildup in business stockpiles. That gain isn't likely to be repeated in the fourth quarter.

The third-quarter increase in GDP -- the economy's total output of goods and services -- was the best performance since a 4.9 percent increase in the final three months of 2011.

Outside the volatility caused by changes in stockpiles, many analysts say the economy has begun to improve in the current quarter. Steady hiring has lowered the U.S. unemployment rate to a five-year low of 7 percent. And much of the November economic data so far have been upbeat.

Consumer spending at retail businesses rose in November by the most in five months. Factories increased output for the fourth straight month, led by a surge in auto production. Builders broke ground on homes at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates. Auto sales haven't been better since the recession ended 41/2 years ago. And the stock market is at all-time highs.

Analysts will pay close attention to consumer spending in the fourth quarter. It drives 70 percent of economic growth.