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GDP revised lower for third quarter

WASHINGTON, Nov. 22 (UPI) -- The U.S. Commerce Department lowered the third-quarter gross domestic product estimate from 2.5 percent growth to 2 percent Tuesday.

The figure came in lower than the 2.3 percent growth economists expected as the department lowered its estimate of consumer spending from 2.4 percent growth to 2.3 percent. Fixed investments also rose less than previously reported, up 12.3 percent, not the 13.8 percent estimated a month earlier.

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The headline figure, however, shows faster growth than the quarter-to-quarter comparison of the second quarter over the first, when the economy grew 1.3 percent.

"The all-important question is whether this improvement merely represented a rebound from disruptions to supply chains caused by the [March 11] Japanese earthquake, or whether it sets the scene for a further acceleration in the rate of growth in the final quarter of the year," said Chris Williamson, director and chief economist of research firm Markit.

The Bureau of Economic Analysis also revised its inventory figure, showing a sharp departure from the previous estimate in which inventories were reported as growing by $5.4 billion. The bureau now says inventories declined by $8.5 billion.

One revision went the other way. Tuesday's report shows the net deficit in exports was $400.7 billion, an improvement from the previously reported $409.4 billion.

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Commerce said corporate profits increased $39.8 billion in the third quarter, down from $61.2 billion in the second.

Data suggests the economy grew steadier in the third quarter, but the Purchasing Manager's Index faded in October, "most likely reflecting a weakening of global demand as the eurozone's financial crisis continued to hit business confidence around the globe," Williamson said.

"On balance, therefore, we expect the rate of economic growth to weaken in the current quarter," Williamson said.

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