Economists were both surprised and elated that GDP growth exceeded expectations and rose 3.9% for the third quarter [subscription required]. While the housing and mortgage crisis hurt growth and brought down the GDP, it was more than offset with a 2% increase in consumer spending and a 1% increase in international trade, as exports surged thanks to the falling value of the dollar. Many economists believe it was this strong showing in the GDP that influenced the Fed in its decision to cut interest rates by just one quarter percent rather than one half percent.

The key question now is: will it last? Many economists don't think so. They explain that the the first signs of weakness in the economy were at the end of the quarter in September and the full impact of the housing and credit crisis won't be felt until the fourth quarter. Economists expect the fourth quarter growth rate to be closer to 1%. Consumer confidence dropped in October because of the housing and mortgage mess. Since consumer spending accounted for 2% of that 3.9% growth, if consumers hold back their spending, it will have a significant impact on fourth quarter growth. Escalating food and fuel prices could be another key factor that could hurt growth as could unemployment claims, which edged higher as the impact of the slowing housing market is being felt in other sectors of the economy.

Retailers face the biggest problems as we enter the fourth quarter -- their most important quarter of the year. If holiday sales fall below target, many retailers will be facing a bad year.

Don't start celebrating yet. Economists think we're headed for a drop in the fourth quarter and that will be followed by weaker quarters in the first half of 2008. Where do you think we're headed?