U.S. GDP Revised Down To Show 2.0% Growth Pace

Lower consumer spending pulls growth rate down.

The U.S. economy grew at a 2% rate in the third quarter, the government reported Dec. 21 day in a slight downward revision of gross domestic product. The Commerce Department, in its final revision of growth in the July-September quarter, notched down its earlier estimate of a 2.2% annualized pace.

The revision came from a slight downward adjustment in the estimate of consumer spending growth in the quarter to 2.8% instead of 2.9%. The department said the slowdown in consumer spending was driven by better data on medical care spending, which was revised lower. That offset slight upward revisions to durable goods spending.

The latest revision left unchanged the picture of an economy that has shifted to a lower growth pace, held back by slumping real estate but still underpinned by consumer and business spending.

Business investment grew 10%, unrevised from the last estimate.

An inflation index linked to GDP showed a 2.4% increase in prices, and was unrevised after a 4% jump in the second quarter. Core prices excluding food and energy were up 2.2%, slightly ahead of the Federal Reserve's unofficial target but suggesting that the central bank's view of easing inflationary pressures is correct.

Copyright Agence France-Presse, 2006

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