The U.S. economy grew faster than previously thought in the third quarter, helped by exports and government spending, but a sluggish world economy and belt-tightening by Washington looks set to put on the brakes again.
Other data on Thursday showed factory activity in the mid-Atlantic region picked up this month, while home resales in November were the best in three years, indicating the economy retained some vigor early in the fourth quarter.
However, a rise in first-time applications for unemployment aid last week suggested job growth remains modest.
Gross domestic product expanded at a 3.1 percent annual rate in the third quarter, the Commerce Department said. It was the fastest pace since late 2011 and more than double the second quarter's 1.3 percent rate.
A month ago, the department said GDP grew at 2.7 percent pace during the July-September period.
Millan Mulraine, a senior economist at TD Securities in New York, said the factors that boosted growth in the third quarter would not carry through the reminder of the year.
"The fact that we had an upward revision means that it's a higher hurdle in the fourth quarter to get above the current best case of 1 percent (growth)," he said.
Economists say businesses have hunkered down in the current quarter out of worry that currently stalled budget talks in Washington will fail to steer clear of a $600 billion "fiscal cliff" that could tip the economy back into recession.
Even if a deal is reached to avoid the brunt of the blow, a tighter fiscal policy and cooling global economy are still likely to weigh on U.S. growth in coming quarters.
A Reuters poll of economists earlier this month showed a median forecast for GDP growth in the fourth quarter of just a 1.2 percent annual pace. Economists expect GDP to expand just 1.9 percent next year.
In a second report, the National Association of Realtors said sales of previously owned homes surged 5.9 percent in November to a seasonally adjusted annual rate of 5.04 million units. It was the fastest sales pace since November 2009 and confirmed a housing recovery was strengthening.
KB Home, the nation's fifth-largest homebuilder, reported a 20 percent rise in quarterly revenue in the latest quarter as selling prices rose, although higher costs still squeezed its margins.
Separately, a factory gauge from the Philadelphia Federal Reserve Bank showed activity in the mid-Atlantic region turned up this month after slipping in November, a finding that should ease fears of a hard landing for U.S. manufacturing.