Q3 Growth Revised Down to 2.8%

Corporate profits up $130 billion

Economic growth in the third quarter was revised down to 2.8%, the Commerce Department said on Nov. 24, cutting its earlier estimate of a 3.5% pace of expansion.

The growth, despite the downward revision, marked the first expansion for the economy after four straight quarters of contraction, including a 0.7% drop in the second quarter.

The revision to gross domestic product (GDP), or the output of goods and services, reflected updated data showing a wider trade deficit and weaker consumer spending.

The data from the July-September period show the world's biggest economy appearing to emerge from its brutal recession, but with less momentum than previously thought.

Personal consumption expenditures -- the main driver of economic activity -- increased 2.9% in the quarter, revised down from an estimate last month of 3.4%.

The revised figures showed exports of goods and services increased 17% in the third quarter, but imports grew at a faster pace of 20.8%, a factor that hurts GDP.

Other segments of the economy remained weak, with business investment down 4.1%.

But the housing sector emerged from its slump, with residential fixed investment jumping 19.5%, in contrast to a plunge of 23.3% in the second quarter.

The report also showed corporate profits up $130 billion in the third quarter. Augustine Faucher at Moody's Economy.com said this was a jump of 10.6% at an annualized rate, and added, "this bodes well for near-term hiring and investment."

Copyright Agence France-Presse, 2009

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