NEW YORK (TheStreet) -- The last time the U.S. military had a surge like this, it was in Iraq.

The nation's economy grew at

a 3.5% annual clip

in the third quarter, the government reported Thursday morning -- but take it with a grain of salt. The big reason the numbers crushed forecasts for 3% growth is that defense spending rose 16% -- adding two-thirds of a percentage point to gross domestic product growth. That means the economy really grew at almost exactly the 3% rate economists expected -- at least in this first, preliminary estimate, which will be revised next month.

That explains why the market isn't reacting much -- the news, examined closely, is nearly what investors have been expecting after a 4.6% annualized second-quarter jump.

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Watch the video below to get Jim Cramer's take on the GDP number:

"It's a really good report,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa. "Estimates for the fourth quarter will be at least as strong.''

The strong points:

  • Inventories actually shrank, subtracting almost six-tenths of a percentage point from growth. That means final demand and exports were a little better than the headline number suggests, and it almost offsets the jump in defense spending.
  • A smaller-than-expected rise in residential investment. Because the estimate of a 3.8% annualized increase was smaller than expected, based on previously reported data on housing starts, that number may be revised upward, or more growth may simply show up in the fourth quarter as builders like D.R. Horton (DHI) - Get Report and Pulte Homes (PHM) - Get Report  do more business, Naroff said.

The weak points:

  • The jump in defense spending won't last, said Richard Moody, chief economist of Regions Financial in Birmingham, Ala. It might be revised down or simply go away in the last part of the year, limiting the happy news for defense contractors like Lockheed Martin (LMT) - Get Report or Boeing (BA) - Get Report , he said. The Commerce Department's release didn't explain what caused the surge in defense spending, he added.

  • Consumer spending was weaker than anticipated, especially on services, Naroff said. Households boosted their outlays at a 1.8% annual rate, down from 2.5% in the second quarter. Spending on durable goods like Ford (F) - Get Report cars or Whirlpool (WHR) - Get Report refrigerators rose at more than a 7% clip, but spending on services was up just 1.1% at a yearly rate.

The verdict:

The numbers were close to what was expected, aside from the defense spending. Bulls may point to the inventory numbers and argue that the core of the economy is getting better faster than expected, while skeptics will say the defense spending is a fluke. Both are right, as far as they go.

The numbers don't give much reason for the Federal Reserve to do anything it isn't already doing. The central bank noted on Wednesday that growth is getting more solid and job markets are firming. Net out the flukish pluses and minuses of the GDP report, and it looks as if  Janet Yellen & Co. basically got it right.

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At the time of publication, the author held no positions in any of the stocks mentioned

Follow @tim mullaney

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.