Economic Growth Just 2%, Well Below Earlier Estimate
Published: Tuesday, 22 Nov 2011 | 9:31 AM ET
by Reuters
The U.S. economy grew more slowly than previously estimated in the third quarter, but weak inventory accumulation amid sturdy consumer spending supported views output would pick up in the current quarter.
Gross domestic product grew at a 2.0 percent annual rate in the July-September quarter, the Commerce Department said in its second estimate on Tuesday, down from the previously reported 2.5 percent.
While the revision was below economists' expectations for a 2.5 percent growth pace, the composition of the GDP report, especially still-firm consumer spending and the first drop in businesses inventories since the fourth quarter of 2009 set the platform for a stronger economic performance this quarter.
"The mix or composition of growth improved. Inventory investment was lower so firms are more likely to produce more goods going forward. And exports rose," said Cary Leahey, a senior economist at Decision Economics in New York.
"So while you lost a half percentage point in the revision to third-quarter growth, you might easily get it back in the fourth quarter of this year or the first quarter of next."
Data so far suggest the fourth-quarter growth pace could exceed 3 percent, which would be the fastest in 18 months.
Full article: http://www.cnbc.com/id/45399429
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