U.S. Growth Revised Down Sharply To 2.2%

Largest revision in 10 years.

The government's estimate of U.S. economic growth for the fourth quarter was revised down sharply to a 2.2% pace from an earlier figure of 3.5%, data showed Feb. 28.

The report maintained its earlier estimate of lower investment spending that is consistent with a broad manufacturing slow-down. Weaker motor vehicle output, for example, cut 1.24 points from growth.

Consumer spending and inventories were revised lower, and imports were revised up on new trade data.

The Commerce Department's downward revision, the biggest in a decade, showed a continuation of the sluggish pace of expansion from mid-2006 instead of the growth spurt suggested in the earlier figure. The revision is the largest since the second quarter of 1997, when the government changed its second estimate by 1.4 percentage points.The department said a typical revision is about 0.5 percentage points and revisions of 1.3 percentage points or more have only happened seven times in the last 30 years.

The economy grew at an unrevised 2% annual rate in the third quarter, after growing at a 2.6% annual rate in the second quarter.

Copyright Agence France-Presse, 2007

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