Economic Indicators, Stock Market & Investment Reports

11.24.2009

Third-Quarter U.S. Economic Growth Revised Lower

The U.S. economy grew at slower pace in the third quarter than initially reported as weak consumer spending and rising imports softened the effect of stimulus efforts. The revised numbers suggested that growth going forward would be slow.

The nation’s gross domestic product rose at an annual rate of 2.8 percent in the third quarter, compared with a contraction of 0.7% in the prior quarter, the Commerce Department reported Tuesday. The revised GDP falls short of the 3.5 percent originally estimated last month. Compared with a year ago, real GDP is down 2.5%.

Even though growth was slower, the third quarter probably marked the end of the longest recession since World War II, with the economy expanding for the first time in a year. The report does not mark the official end of the recession, though. That determination will be made by the National Bureau of Economic Research, likely sometime in 2010 once all the various economic readings have had their final revisions.

Much of the growth can be attributed to the billions of dollars the federal government has pumped into the economy as it seeks to mitigate the effects of a deep recession. But the nation is still grappling with the highest unemployment rate in 26 years, hampering efforts to persuade consumers to open their wallets again.

Consumer spending in the third quarter increased 2.9 percent, falling short of the 3.4 percent it reported last month. Economists said it was below healthy margins and lower than the levels seen in 1983, when unemployment was equally high. Consumer spending makes up about 70 percent of the economy. Households continue to struggle with damage balance sheets and lingering labor market weakness.


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