The upward revision to GDP, in line with Wall Street expectations, was due to larger inventory building and a better trade balance. A month ago, the government pegged Q3 GDP at 3.9%. The government publishes three estimates of GDP, adding more complete information with each passing month. Real GDP has increased 2.8% in the past year, close to the economy’s long-run potential. Growth wasn’t balanced in the Q3, nearly half of which came from inventory building and an improvement in the trade balance. „On a sour note, stronger growth in the third quarter implies weaker growth in the Q4 due to a partial payback in both trade and inventories,” wrote economists for Lehman Bros. ahead of the release. Lehman’s forecasting growth of just 0.8% in the current quarter. In a separate report Thursday, the Labor Department said initial claims for unemployment benefits shot higher by 23,000 last week, to a total of 352,000, while the number of people receiving benefits rose to a two-year high.

Consumer spending was revised slightly lower, growing at a 2.7% pace, while business investments were revised slightly higher to a 9.4% pace. Final worldwide sales of domestic product increased 3.9%, but domestic demand was weaker, growing at a 2.4% pace. Consumer inflation was unrevised at 1.7%, within the Federal Reserve’s target zone. Core prices, which exclude food and energy, increased at a 1.8% annual rate. Core prices are up 1.9% in the past year. (marketwatch)