The U.S. economy grew 2.8 percent in the third quarter, a pace slower than first thought, according to the revised estimate released by the Commerce Department on Tuesday.
The government's new reading on gross domestic product was 0.7 percentage points lower than the 3.5 percent growth rate for the
July-September period estimated on Oct. 29.The increase was also weaker than economists' expectation of 2.9 percent, indicating the rebound was not as energetic as expected.
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 were factors that led to the downgrade revision.
The growth of real GDP -- the output of goods and services produced by labor and property located in the United States -- in the third quarter was mainly propelled by the government's economic stimulus package.
Despite downgrading, the 2.8 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 new report showed that consumer spending, which accounts for about 70 percent of national economic activity, grew at a pace of 2.9 percent last quarter. That was down from the 3.4 percent growth rate first estimated, but still marked the best showing since early 2007.
Businesses cut back their spending on commercial construction at 15.1 percent annualized pace. That was deeper than the 9 percent annualized cutback first estimated.
Companies also trimmed stockpiles of goods by 133.4 billion U.S. dollars in the third quarter, slightly more than initially estimated.
The U.S. government makes three estimates of economic activity for any given quarter. Each is based on more complete data. Tuesday's report was the second reading of the third-quarter GDP data.
Economists say that the worst recession since the 1930s is very likely over, but the economy's return to good health will take time, and the growth probably won't be strong enough to quickly drive down the nation's unemployment rate, which reached 10.2 percent in October. That was the second time in the post-World War II period that unemployment has topped 10 percent.
Many economists predict that the most probable scenario in the next year will be a slower growth of less than 2 percent as the impact of the 787-billion-dollar stimulus package fades and consumers are still reluctant to spend.
U.S. President Barack Obama said again Monday that 2009 has been a sobering year for millions of newly unemployed people.
"We cannot sit back and be satisfied given the extraordinarily high unemployment levels that we've seen," Obama said, "We have only taken the
first step in curing our economy."
But the president said that the nation's economy is in good shape for the long term thanks to "core strengths" such as its universities, its
innovation and a dynamic workforce.
Obama also asked people to be patient about the economic recovery. What's not clear now is whether the recovery can continue after
government supports are gone.
Obama recently cautioned that the economy could suffer a "double dip" downturn.
Federal Reserve Chairman Ben Bernanke also warned that the recovery faces "important headwinds," such as tight credit and a weak job market that will make consumers cautious in their spending.
Some economists think the jobless rate could climb as high as 11 percent by the middle of next year before making a slow descent. It could
take at least four years for the unemployment rate to drop back down to more normal levels.
Against that backdrop, Obama announced a job summit on Dec. 3 to invite experts from different sectors to help the government create more jobs.
Paul Krugman, a Nobel Economics Prize laureate said the government needs a new round of stimulus to keep the economic recovery going.
But others warned that it will worsen the nation's already dangerous federal debt burden, which was recorded at 1.42 trillion dollars in the 2009 fiscal year ended Sept. 30.
Critics said that the Obama administration's economic policies were not as effective as the government's expectations. They believed that the growth in the third quarter was because of the economy's self strength of recovery.
A Republican congressman even asked Treasury Secretary Tim Geithner to resign during a hearing last Friday, saying the public has lost confidence in the government.