The growth was fuelled by rising consumer confidence, the fledgling recovery in the housing market and an uptick in government spending.
The worry for Democrats is that the favourable figures may be arriving too late to have a big impact on the election.
Obama and Republican presidential challenger Mitt Romney are stuck on 47% each in the polls, according to the average of polls on Real Clear Politics, and looking for an issue that will tip the balance in their favour in the final days of the campaign.
There are big variations between individual polls, with the latest Gallup daily tracking poll putting Romney back up five points, on 51% to Obama's 46%.
A CNN poll in Ohio, which has emerged as the pivotal state of the election, attracting more visits by the candidates than any other, shows Obama is on 50% to Romney's 46%. Republican senator Rob Portman, who is co-chair of Romney's campaign, admitted on NBC that it would be hard for Romney to win the White House without Ohio.
Romney delivered a speech in Ames, Iowa, another swing state, what his aides had billed as a major address on the economic but in fact contained nothing new in terms of policy. He had one fresh rhetorical line, rehearsed by the Romney campaign in an ad earlier in the week, in which he accused Obama of focusing on trivial issues because he had no record worth fighting the election on.
"This is an election of consequence. Our campaign is about big things, because we happen to believe that America faces big challenges. We recognise this is a year with a big choice, and the American people want to see big changes. And together we can bring real change to this country," Romney said.
"Four years ago, candidate Obama spoke to the scale of the times. Today, he shrinks from it, trying instead to distract our attention from the biggest issues to the smallest, from characters on Sesame Street and silly word games to misdirected personal attacks he knows are false."
He then returned to what is basically his stump speech.
Although the election has been largely dominated by the economy, it has broadened to encompass social issues, mainly abortion and rape, and, more recently, racial tensions.
On abortion and rape, the Obama campaign put out a new web page with a clock marking how long Romney has maintained his endorsement of Indiana senate candidate Richard Mourdock who on Tuesday said that that pregnancies from rape are "something that God intended". It follows a claim by another Republican senate candidate, Todd Akin, in Missouri, who used the phrase "legitimate rape".
On race, the former governor of New Hampshire, John Sununu – a leading Romney surrogates – was forced to go into reverse after suggesting that Colin Powell, a secretary of state in the George W Bush administration, had endorsed Obama simply because he is black.
Democrats claimed this was not an off-the-cuff remark but part of a deliberate strategy on the part of the Romney campaign to make race an issue. A Washington Post poll this week showed fewer whites supporting Obama in this election than in 2008.
Obama's 2008 opponent John McCain beat him among white voters by 12 points. According to the Washington Post poll, Obama is trailing Romney among whites by 23 points.
On Friday, Sununu backtracked over his remark about Powell's endorsement. "Colin Powell is a friend and I respect the endorsement decision he made and I do not doubt that it was based on anything but his support of the president's policies," Sununu, a former White House chief of staff, said.
On Thursday night, speaking on CNN, Sununu had said: "Frankly, when you take a look at Colin Powell, you have to wonder if that's an endorsement based on issues, or whether he's got a slightly different reason for preferring president Obama?" Asked what reason that might be, Sununu said: "Well, I think when you have somebody of your own race that you're proud of being president of the United States, I applaud Colin for standing with him."
Tad Devine, a senior adviser to the Gore campaign in 2000 and Kerry in 2004, saw this as part of a Republican strategy aimed at making race part of the campaign. "I believe there is a systematic effort on the part of the Republican party to introduce a racial component into this election … I don't think this is accidently shooting off at the mouth."
Obama, speaking to Democratic campaign workers in his hometown Chicago on Thursday night before flying back to Washington, acknowledged that the race is close and that he might lose, while adding he still expected to win.
"This is going to be a close election, so we just got to work really hard over these next 12 days. If we let up and our voters don't turn out, we could lose this election," Obama said:."Now the good news is, if our voters do turn out, we will definitely win the election."
The president spent Friday in the White House doing 10 interviews, mainly with media from the swing states that will decide the outcome on November 6, while Romney continued his campaign tour in Iowa and Ohio.
The White House welcomed the news from the department of commerce on economic growth. Although the economy remains sluggish, this was the 13th straight month of growth.
Alan Krueger, chairman of the White House council of economic advisers, said that over those 13 months the economy had expanded by 7.2% overall.
"While we have more work to do, together with other economic indicators, this report provides further evidence that the economy is moving in the right direction.," he said.
The figures on growth, the last from the commerce department before the election, come after unemployment statistics released earlier this month showed a drop below the symbolically important 8%. The next unemployment figures are due just before polling day.
Romney described the growth figures as discouraging. "Slow economic growth means slow job growth and declining take-home pay. This is what four years of president Obama's policies have produced. Americans are ready for change — for growth, for jobs, for higher take-home pay," he said in a statement.
In spite of the increase in consumer confidence, businesses are reining themselves in, worried about the so-called 'fiscal cliff" at the end of the year when Bush-era tax cuts are due to expire and massive spending cuts scheduled to kick in unless there is a political compromise.
With 10 days left to the election, the Obama campaign claims to have a slight edge in the swing states and to have stopped the momentum that Romney built up after his debate victory in Denver on December 3. The Romney campaign insisted that the momentum is still with them, bringing into play more states, such as Wisconsin.
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