U.S. economy rebounds slower than previously thought

WASHINGTON, Dec. 22 (Xinhua) -- The U.S. economy grew at a pace of 2.2 percent in the third quarter, a much slower pace than initially thought, according to the final revised estimate released by the Commerce Department on Tuesday.

SLOWER GROWTH

The new reading for the July-to-September quarter was 0.6 percentage point lower than the 2.8 percent growth rate estimated on November 24, and 1.3 percentage point lower than its first estimate released on October 29.

The increase is also weaker than economists' expectation of a flat reading, indicating the rebound was not as energetic as previously anticipated.

The U.S. government makes three estimates of the real gross domestic product (GDP) -- the output of goods and services produced by labor and property located in the United States – for any given quarter. Each is based on more complete data. Tuesday's report was the final reading of the third quarter GDP data.

The growth of real GDP in the third quarter was mainly propelled by government's economic stimulus package including the popular cash for clunkers and tax credit for first-time home buyers, and debate continues to rage over the sustainability of the recovery once government support wanes.

Despite downgrading, the 2.2 percent growth still marked the first increase after four consecutive quarters of contraction.

In the first two quarters of 2009, the U.S. real GDP decreased 6.4 percent and 0.7 percent respectively. In the third and fourth quarters of 2008, the economy contracted 2.7 percent and 5.4 percent.

The resumption of growth in the July-to-September period probably ended the most brutal recession since the 1930s.

FACTORS BEHIND

In the third quarter, U.S. consumers didn't spend as much, and commercial construction was weaker. Businesses also trimmed more of their stockpiles. Those are factors that led to the downgrade revision.

The new report showed that business spending in the third quarter was weaker than the government had estimated last month. Business investment fell at a 5.9 percent rate instead of 4.1 percent.

Nonresidential building activity dropped 18.4 percent in the third quarter rather than 15.1 percent, a reflection of the troubles in the commercial property market. That shaved 0.68 percentage points off GDP.

Imports jumped 21.3 percent, the biggest gain since the first quarter of 1984, instead of 20.8 percent, while exports grew 17.8 percent. That left a trade gap which lopped off 0.81 percentage points from GDP in the third quarter.

Consumer spending was slightly revised down, but it helped to offset the drag on growth from a steep drop in business investment. Consumer spending, which normally accounts for about 70 percent of U.S. economic activity, grew at a 2.8 percent annual pace in the third quarter rather than the 2.9 percent rate the government estimated in November.

Businesses trimmed stocks of unsold goods more aggressively than previously thought. Business inventories fell 139.2 billion dollars in the third quarter, rather than the 133.4 billion dollars the government estimated in November.

Inventories plunged a record 160.2 billion dollars in the second quarter. The change in inventories added 0.69 percentage points to real GDP in the third quarter.