The Commerce Department revised the Gross Domestic Product growth up to 2.5% from 2% this week. This is higher than the 2.4% analysts had predicted, and can be attributed to stronger consumer and government spending. “It wasn’t inventories, which is good news,” said Nigel Gault, Chief U.S. Economist at IHS Global Insight in Lexington, Massachusetts. “You had positive surprises in spending to outweigh inventories. Hopefully we can carry that momentum into the fourth quarter. It’s good news.” Government spending increased 4.0% instead of the 3.4% expected, due to an upward revision in state and local expenditures. Business spending also increased more than expected, 10.3% versus the 9.7 % expected.

The unemployment extension approved this summer will expire on December 1, just in time for the holidays. This will end benefits to approximately 2 million persistently unemployed Americans. Rep. Mike Pence, the No. 3 Republican in the House: “We’re facing a fiscal crisis in this country. If we’re going to choose to extend unemployment again we’ve got to find a way to pay for it.”

The National Association of Realtors announced that sales of previously owned homes dropped 2.2% last month to a seasonally adjusted annual rate of 4.43 million units. In October, the median sales price for a home was $170,500, which is down 0.9 % from last year. As a comparison, sales in October were down 38.9% from the peak of the housing boom in September 2005.

Initial claims for unemployment dropped 24,000 to 435,000 according to the Labor Department. The four-week average of claims fell 10,000 to its lowest level since September 2008 of 446,500. A Labor Department analyst said that applications fell partly because the weather has been relatively warm so far this fall and construction and manufacturing firms haven’t temporarily laid off as many workers due to cold weather as they have in the past.

The US Commerce Department announced that the trade deficit shrank 5.3% in September to $44 billion. Exports rose to their highest level in more than two years and imports dropped 1%. Analysts had expected the deficit to narrow to $45 billion in September. With the deficit shrinking, trade is unlikely to be as big a drag on third-quarter gross domestic product as originally estimated. This is a good sign and the trade sector may contribute to the recovery in the fourth quarter.

New home sales increased 6.6% in September, the second month of gains, but still 21.5% below last year’s level when the tax credit was in place. The seasonally-adjusted annualized rate of 307,000 is roughly what economists had expected. Sales of existing homes also increased 10%, which was also more than expected, lending support to some who believe housing demand hit a bottom in late summer. The government estimates there is an 8 months supply of unsold homes, which is down from an 8.6 month supply in August. The stock of unsold houses fell 1% from August and dropped 19% from Sept. 2009.