casper
11-25-2009, 10:55 AM
U.S. third-quarter economic growth revised down
By Lucia Mutikani
WASHINGTON - The U.S. economy grew more slowly than first thought in the third quarter, but a fifth month of gains in house prices in September and an improvement in consumer morale signaled the anemic recovery was intact.
In its second estimate of third quarter gross domestic product published on Tuesday, the Commerce Department said the economy expanded at a 2.8 percent annual rate, probably ending the most painful U.S. recession in 70 years.
It was slower than the previous estimate of 3.5 percent but still the fastest pace since the third quarter of 2007, reflecting government fiscal stimulus. The new estimate was slightly below expectations for a growth rate of 2.9 percent.
That helped to push stocks on Wall Street lower as investors shrugged off two other reports showing house prices maintained their gains in September and consumers were a bit more optimistic this month, despite high unemployment.
"We are still on the right path and a double-dip (recession) is not on the cards," said Jonathan Basile, an economist at Credit Suisse in New York.
With federal programs the main force behind the recovery, some economists are wary of risks of a double-dip recession -- a scenario where output perks up briefly only to fall again when government support ends.
Minutes of the Federal Reserve's policy meeting early this month released on Tuesday showed officials at the U.S. central bank viewed the recovery as durable, although they expected unemployment to rise further.
The Fed cut interest rates to near zero last December and has committed to keep them low for an extended period to aid the recovery that officials said would continue at a slow pace relative to historical experience.
Economists expect the U.S. unemployment rate to climb from its current 26-1/2 year high of 10.2 percent. President Barack Obama is under to pressure to find ways to spur job growth without unduly fueling an already record budget deficit.
The return to growth in the July-September period, after four straight quarters of declining output, followed a 0.7 percent contraction in the April-June period.
Output was constrained by consumer spending that was not as robust as first thought. Strong imports and weak investment in commercial buildings also held back growth.
But corporate profits surged as businesses raised output even as they were cutting payrolls.
U.S. DEMAND SATED BY IMPORTS
In another sign of stability in a sector that was at the heart of the recession, the Standard & Poor's/Case-Shiller index of home prices in 20 metropolitan areas rose 0.3 percent in September. Analysts said a tax credit for first time homebuyers helped support the market.
An index published by the U.S. Federal Housing Finance Agency found prices unchanged in September.
By Lucia Mutikani
WASHINGTON - The U.S. economy grew more slowly than first thought in the third quarter, but a fifth month of gains in house prices in September and an improvement in consumer morale signaled the anemic recovery was intact.
In its second estimate of third quarter gross domestic product published on Tuesday, the Commerce Department said the economy expanded at a 2.8 percent annual rate, probably ending the most painful U.S. recession in 70 years.
It was slower than the previous estimate of 3.5 percent but still the fastest pace since the third quarter of 2007, reflecting government fiscal stimulus. The new estimate was slightly below expectations for a growth rate of 2.9 percent.
That helped to push stocks on Wall Street lower as investors shrugged off two other reports showing house prices maintained their gains in September and consumers were a bit more optimistic this month, despite high unemployment.
"We are still on the right path and a double-dip (recession) is not on the cards," said Jonathan Basile, an economist at Credit Suisse in New York.
With federal programs the main force behind the recovery, some economists are wary of risks of a double-dip recession -- a scenario where output perks up briefly only to fall again when government support ends.
Minutes of the Federal Reserve's policy meeting early this month released on Tuesday showed officials at the U.S. central bank viewed the recovery as durable, although they expected unemployment to rise further.
The Fed cut interest rates to near zero last December and has committed to keep them low for an extended period to aid the recovery that officials said would continue at a slow pace relative to historical experience.
Economists expect the U.S. unemployment rate to climb from its current 26-1/2 year high of 10.2 percent. President Barack Obama is under to pressure to find ways to spur job growth without unduly fueling an already record budget deficit.
The return to growth in the July-September period, after four straight quarters of declining output, followed a 0.7 percent contraction in the April-June period.
Output was constrained by consumer spending that was not as robust as first thought. Strong imports and weak investment in commercial buildings also held back growth.
But corporate profits surged as businesses raised output even as they were cutting payrolls.
U.S. DEMAND SATED BY IMPORTS
In another sign of stability in a sector that was at the heart of the recession, the Standard & Poor's/Case-Shiller index of home prices in 20 metropolitan areas rose 0.3 percent in September. Analysts said a tax credit for first time homebuyers helped support the market.
An index published by the U.S. Federal Housing Finance Agency found prices unchanged in September.