GDP Growth Revised Lower to 2.8%

[stormcris]

BY LUCA DI LEO AND JEFF BATER

The U.S. economy's recovery wasn't as strong as earlier believed, as third-quarter gross domestic product was revised to show a wider trade deficit and lower consumer spending than previously estimated.

A separate report showed that while consumer confidence improved in November, U.S. consumers continue to be anxious about a sluggish economy.

Gross domestic product rose at a 2.8% seasonally adjusted annualized rate in July through September after falling by 0.7% in the second quarter, the Commerce Department reported. A month ago, the department first estimated that GDP rose an annualized 3.5% in the third quarter.

In a sign that the recovery remains sluggish, the GDP report showed gauges measuring third-quarter price inflation were subdued. Meanwhile, corporate profits rose by 10.6% in the July-to-September period, the biggest increase in five years. Companies have been cutting costs by slashing jobs, leading to a spike in unemployment.

Although the data confirmed that the economy expanded for the first time in more than a year as the government's stimulus boosted consumer spending, the latest report showed that motor vehicles spending in September was lower than had been estimated. Outlays on automobiles were boosted in the period by the U.S. government's cash for clunkers program.

Overall consumer spending rose a quarterly 2.9% in the third quarter, compared to the earlier estimate that spending had risen by 3.4%.

"While 2.9% is a healthy enough level of spending, it must be noted that between 1970 and 2007, consumer spending has averaged 3.4% on a quarterly basis," said Dan Greenhaus, chief strategist at Miller, Tabak & Co. in New York.He added that in 1983 -- the last period in which the unemployment rate was as high as it is now -- quarterly consumer spending averaged 6.5%.

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Thoughts?

[LancesMom]

I wonder sometimes where they get their info from. I know we have not done any extra spending at all in over a yr. The only time we ate out was when we got a gift card for Christmas! The economy totally still sucks!

[stormcris]

I wonder that myself but then I thought maybe it was all from the cash for clunckers.

Quoting LancesMom:

I wonder sometimes where they get their info from. I know we have not done any extra spending at all in over a yr. The only time we ate out was when we got a gift card for Christmas! The economy totally still sucks!