Much of the weakness last quarter reflected a slowdown in consumer spending, which grew at an annual rate of just 2.2 percent, compared with a 3 percent rate in the previous quarter.
The U.S. economy grew at a slightly faster rate in the summer than previously reported, mainly because businesses restocked their goods at a stronger pace than first thought.
U.S. hiring showed a strong downturn in September, and job gains for July and August were lower than previously thought, a sour note for a labor market that had been steadily improving.
Employers added 215,000 jobs in July and the unemployment rate held at a seven-year low of 5.3 percent, possible signs of further progress in the U.S. labor market that’s keeping the Federal Reserve on the path toward raising interest rates as soon as next month.
The rate fell mostly because many people out of work gave up on their job searches and were no longer counted as unemployed. Average hourly pay was flat.
The trend indicates that employers are confident enough in future consumer demand to retain their staffs. The number of people receiving benefits fell 50,000 to 2.22 million.
The U.S. economy skidded to a near halt in the first three months of the year, battered by a triple whammy of harsh weather, plunging exports and sharp cutbacks in oil and gas drilling.
Orders to U.S. factories for long-lasting manufactured goods bounced back in January, rising by the largest amount in six months, although much of the strength came from a big jump in airplane orders.
Personal income rose 0.3 percent in December, aided by the steady wave of hiring over the past year. But rather than spend those gains, consumers saved more of their disposable income.
The sizzling rate gives credence to many analysts who think U.S. growth is finally set to accelerate. More people are working and have money to spend.
Hiring last month was broad-based but particularly concentrated in retail, temporary services and transportation and warehousing.
After Tuesday's midterm elections, exit polling showed how little falling unemployment has resonated. Most voters said they cast their ballots out of fear for the economy.
Employers have now added at least 200,000 jobs for nine straight months, the longest such stretch since 1995.
A survey of Harvard Business School alumni released Monday reveals a series of trends that are widening income disparities and may be weakening the ability of the U.S. economy to grow in the long term.