White House economists on Monday warned that the uncertainty of a potential hike in taxes next year for middle class taxpayers could hurt consumer confidence and spending during the crucial holiday shopping season.Businesses have also grown more cautious because Europe's financial crisis has pushed many countries in the region into recession. That has cut into U.S. exports and corporate profits. Growth has also slowed in China, Brazil and other big developing nations which are major markets for American exports. U.S. factory activity grew in October for a second straight month, according to the Institute for Supply Management closely watched manufacturing survey. But regional surveys indicated manufacturing shrank this month in the Philadelphia and New York regions, partly reflecting damage from Superstorm Sandy that disrupted area factories. The storm may have also weighed on durable goods orders in October, although most economists expect the storm's impact to fade in the coming weeks. The economy is expanding at a modest pace. Many economists now predict growth at an annual rate of roughly 3 percent in the July-September quarter, up from the initial estimate of 2 percent reported last month. The government releases its second estimate for third-quarter growth on Nov. 29. Still, many economists say the economy is growing in the current October-December quarter at an annual rate below 2 percent. That's too slow to make much of a dent in the unemployment rate, which was 7.9 percent last month. Orders for transportation equipment were down 3.1 percent in October. That reflected a 1.6 percent fall in demand for autos and auto parts and a 5.5 percent drop in commercial aircraft orders. Excluding transportation, orders were up 1.5 percent following a 1.7 percent rise in September.