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After Friday's report that the economy grew at a 2% annual rate inthe third quarter, what does the current quarter hold? And how about2013?

The answer depends on who's right about the economy, andespecially the so-called "fiscal cliff'' looming at year's end.Executives who invest in software, equipment and office space arepulling back, worried about how Washington will settle the standoff overdeficit-reducing tax hikes and spending cuts. Consumers, who arespending more on houses and cars, appear to think Washington will reachsome agreement, if it's on their minds at all.

"Consumers aren'tas focused on the fiscal cliff,'' said Michael Hanson, an economist atBank of America Merrill Lynch. "They budget, but don't plan as intentlyas businesses."

Thehousing recovery and strong consumer confidence would keep the economygrowing, possibly as little as 1% in early 2013, even if thegovernment-imposed austerity measures reduced GDP by 2%, Hanson said.That could take the form of ending the payroll tax cut while extendingthe Bush tax cuts, and saving some defense spending while cuttingunemployment insurance taxes, he said.

The median forecast of 48economists surveyed by USA TODAY before Friday's report predicted theeconomy will grow 1.9% this quarter and next, strengthening in themiddle of the year and reaching a 2.8% growth rate late next year.

Growthof under 3% is still weak. Plus, the majority of economists surveyedassume Congress and the president will compromise on the fiscal cliffissue without significant damage to the economy.

But if officialsdon't make a deal, the effect could be disastrous, according to theNational Association of Manufacturers. If all the scheduled spendingcuts and tax increases took effect, the impact would cost 6 millionjobs, and unemployment could top 11% by 2014, the lobbying group said.

"Across the board the uncertainty is crippling,'' said NAM VicePresident Dorothy Coleman. "People don't know what the rules of the gamewill be next year.''

Uncertainty about the fiscal cliff is cutting growth this year by about 0.6 percentage points, the association estimates.

The split in confidence between companies and consumers is showing up in how they act.

Thethird-quarter report on gross domestic product showed big growth inconsumer-goods categories such as autos, furniture and especiallyhousing. Residential construction investment rose at an annual rate of14.4%. Sales of cars and parts rose 6.4%, and recreational goods andvehicles climbed 17.7%.

This has shown up in the third-quarterresults of some leading consumer companies. Travel agency Expedia saidits third-quarter sales of U.S. hotel rooms rose 17%, and home builderRyland said new orders rose 56%.

"While we do see signs ofcaution surrounding managed corporate travel spend(ing) in the U.S., wehaven't felt any incremental effects on the rest of our brands,''Expedia CEO Dara Khosrowshahi said.

The picture is much grimmer for companies that sell to other corporations, especially in technology.

Investmentin equipment and software was unchanged in the third quarter, thegovernment said - after growing at an 18% annual rate during the samemonths last year.

Chipmaker Advanced Micro Devices plans to layoff 1,800 workers. Larger rival Intel also gave a bearish profitoutlook, and tech giants IBM and Microsoft reported sales in at leastsome of their businesses were lower than expected.

Businessinvestment could decline in this quarter due to uncertainty about thefiscal cliff's resolution, said Richard Moody, chief economist ofRegions Financial.

He is forecasting GDP growth of 1.2% thisquarter because "business investment is deteriorating faster than Ianticipated. If you know it's coming (in the first quarter) you're goingto start dealing with it in the Q4 if not earlier."

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