DALLAS – Take a moment to thank Americans’ love affair with the car for boosting the nation’s economic fortunes. Now, take a moment to worry about what’s going to happen as that affection starts waning.

That duality best describes economists’ reaction recently to the 3.7 percent growth in gross domestic product during the third quarter: relief, then worry.

Juiced by low-interest financing and other incentives, strong auto sales drove the national economy in the last three months. Car and parts sales contributed almost 0.93 percentage points of the GDP growth after dragging down the production figures by 0.24 points in the second quarter.

New-car sales nationwide soared 10.3 percent in September.

“The big question is whether that is sustainable or not,” said Anthony Chan, managing director and senior economist at J.P. Morgan Fleming Asset Management. “And the answer is, clearly it is not.”

Economists said automakers wouldn’t stay on that elevated pace in the fourth quarter because they’re scheduling temporary production halts and lowering some incentives. General Motors, for instance, is closing its Arlington, Texas, plant for three weeks early next year because of slowing sales.

In addition to auto sales, growth in the fourth quarter may also slow due to rising energy prices. That’s going to eat into consumer and business spending, and could eventually cause greater inflation.

“I still don’t envision a derailment of the expansion,” Chan said. “I just would see an easing off.”

Though the third-quarter report came in under projections of 4 percent growth, it was faster than the second quarter’s 3.3 percent rate. Economists were also pleased to see business spending on information technology, such as software and equipment, increase 14.9 percent.

“Businesses stepped up and invested more in IT and other investments,” said Mark Zandi, chief economist at Economy.com.

Inventories, however, fell $13 billion to $48.1 billion in the quarter, undercutting some of those gains. Though worrying, Zandi said other figures, including bank loans to industry, indicate inventories remained robust in the quarter. He believes the Bureau of Economic Analysis may have to revise its third-quarter figures upwards as more data is collected.

Exports increased $14 billion to $1.1 trillion, but imports rose $31.7 billion to $1.7 trillion. The trade deficit, the difference between the two, grew by $17.7 billion to $598 billion.

Inflation remained in check, with prices, excluding food and energy, rising only 0.7 percent. With food and energy included, they rose 1.1 percent.

That may help ease worries that the Federal Reserve will continue raising interest rates as it has been to moderate growth and inflation. “That gives the Federal Reserve significant latitude to become less aggressive,” Zandi said.

But not everyone subscribes to that theory. Chan suggested that the Fed’s actions are more likely to be governed by longer-term inflation and growth trends than just the third quarter. Price pressures could well return in the fourth quarter as higher gasoline prices at the pump take their toll and filter through the economy.

“The Fed doesn’t act upon what is happening today, necessarily,” Chan said.

Economists were in agreement that the GDP report would probably have little impact on Tuesday’s presidential elections. The growth was strong, but not awe-inspiring. That means President Bush can’t take credit for it and Sen. John Kerry can’t criticize the administration over it.

“It doesn’t give anybody any edge,” Zandi said.

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(c) 2004, The Dallas Morning News.

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GRAPHIC (from KRT Graphics, 202-383-6064): GDP

AP-NY-10-29-04 2009EDT