The U.S. economy grew at a seasonally adjusted 3.3 percent annual rate in the second quarter of this year, as many economists warned the economy will likely fall into recession by the end of the year, a government report said Thursday, Aug. 28, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    WASHINGTON, Aug. 28 (Xinhua) --The U.S. economy grew at a seasonally adjusted 3.3 percent annual rate in the second quarter of this year, as many economists warned the economy will likely fall into recession by the end of the year, a government report said Thursday.

    The increase in real GDP in the second quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), nonresidential structures and government spending, said the Commerce Department while releasing the report.

    The revised figure was much better than the government's initial estimate of a 1.9 percent pace and the economists' estimate of 2.7 percent growth rate.

    GDP measures the value of all goods and services produced within the United States. The second quarter GDP data will be revised once more by the department.

    In the April-to-June period, consumer spending, which accounts for two thirds of the overall economic activity, rose at an annual rate of 1.7 percent due to the economic stimulus package, up from a 0.9 percent growth rate in the previous quarter.

    Spending on housing projects plunged 15.7 percent, not as steep as the 25.1 percent drop in the first quarter and the 27 percent drop in the final quarter of last year.

    The main drive on growth was the export sector, which surged 13.2 percent instead of 9.2 percent as reported originally due to the weak dollar, while imports of goods and services decreased 7.6 percent instead of 6.6 percent.

    "For a recession the economy is certainly growing very quickly," said Avery Shenfeld, senior economist at CIBC World Markets.

    "A lot of that growth is driven off exports and pessimists might say that can't continue during slowing growth overseas, but I would say this happened precisely during the period of slowing growth overseas ... this is still an economy that faces slow times but not a recession," he said.

    The White House also hailed the big gain. "This level growth is demonstrating the resilience of our economy, even in the face of high energy prices and the housing market downturn," said White House Spokeswoman Dana Perino.

    But many economists believe the pace will not continue for the consumer spending is sluggish, while some economists say the economy might fall into a possible recession late this year.

    "There will be heavy sledding for the U.S. economy during the next couple of quarters," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

    "I see possibly a recession by the end of the year, but it will be a relatively short recession and a relatively mild recession," said Martin Regalia, chief economist for the U.S. Chamber of Commerce.

    "Some of the problems in the economy are a little more fundamental than consumption," he told reporters in a briefing.

    U.S. GDP actually declined by an annual rate of 0.2 percent in the final quarter of last year, according to annual revisions released by the department last month.

    The fourth-quarter's drop marked the worst showing since the third quarter of 2001, when the economy was last in a recession. Arecession is typically marked by two straight quarters of negative economic growth.