WASHINGTON, Dec 22 (Reuters) – U.S. economic growth was a
touch higher than previously estimated in the third quarter,
but below expectations as a rise in the pace of inventory
accumulation was offset by downward revisions to consumer
spending, a government report showed on Wednesday.
Gross domestic product growth was revised up to an
annualized rate of 2.6 percent from 2.5 percent, the Commerce
Department said.
Economists had expected GDP growth, which measures total
goods and services output within U.S. borders, to be revised up
to a 2.8 percent pace. The economy expanded at a 1.7 percent
rate in the second quarter.
But data so far suggests growth accelerated in the fourth
quarter and will remain supported in 2011 by an $858 billion
tax deal, which will help plug the gap from the fading boost
from the rebuilding of inventories by businesses and winding
down of the government’s $814 billion stimulus package.
The tax plan, widely viewed as a second fiscal stimulus for
the economy, is seen complementing the Federal Reserve’s
program to buy $600 billion worth of government bonds to shore
up the recovery.
Third-quarter growth estimates were revised to reflect a
$121.4 billion increase in business inventories rather than the
$111.5 billion rise reported last month. Inventories added 1.61
percentage points to GDP growth.
Excluding inventories, the economy expanded at a 0.9
percent pace rather than 1.2 percent.
The increase in consumer spending was revised down to a 2.4
percent rate from 2.8 percent rate. Consumer spending accounts
for more than two-thirds of U.S. economic activity and
contributed 1.67 percentage points to growth in the
July-September period.
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