casper
11-24-2009, 11:59 PM
U.S. Q3 economic growth revised down, house prices up
By Lucia Mutikani
WASHINGTON - The U.S. economy grew more slowly than first thought in the third quarter, but house prices rose for the fifth month in September and U.S. consumer confidence was up in November in data published on Thursday, suggesting a slow economic recovery is still intact.
The U.S. Commerce Department's second estimate of third quarter economic output, published on Tuesday, showed growth at a 2.8 percent annual rate, rather than the 3.5 percent pace it estimated last month.
It was still the fastest pace since the third quarter of 2007, reflecting government fiscal stimulus, but slightly less than expectations for a growth pace of 2.9 percent.
The return to growth in the third quarter, after four straight quarters of declining output, probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7 percent rate in the April-June period.
Gross domestic product growth was constrained by consumer spending that was not as robust as first thought, and by strong imports and weak investment in commercial buildings. But corporate profits surged as businesses raised output even as they were cutting payrolls.
"This will be a muted, slow recovery and it will be strewn with setbacks," said T.J. Marta, chief market strategist at Marta on the Markets. "I don't have a lot of high hopes."
U.S. stocks opened lower, while Treasury debt prices rose slightly after the report was released.
U.S. DEMAND SATED BY IMPORTS
An upward revision to U.S. imports was one factor behind the softer than previously reported GDP figures, showing more domestic demand was sated by overseas production.
Imports jumped at 20.8 percent annual rate, the biggest gain since the second quarter of 1985, instead of 16.4 percent. They knocked 2.53 percentage points off the change in GDP.
Another drag came from the construction of nonresidential structures, which dropped at a 15.1 percent pace rather than 9 percent, as previously reported, highlighting the problems in the commercial property market and shaving just over half a percentage point off GDP growth.
Consumer spending, which normally accounts for more than two-thirds of U.S. economic activity, rose at a 2.9 percent rate, instead of the 3.4 percent pace reported last month. It was the biggest rise since the first quarter of 2007 and represented a turnaround from a 0.9 percent second quarter fall.
Businesses also reduced inventories at a slightly faster rate than had been anticipated. While that revision trimmed third quarter GDP growth, analysts said it helps lay the groundwork for future production.
"That sets up for a better fourth-quarter GDP with more restocking," said John Canally, economist at LPL Financial in Boston.
Excluding inventories, GDP rose at a 1.9 percent rate instead of 2.5 percent. That marked a pickup from the 0.7 percent pace in the second quarter, but showed demand was somewhat lackluster.
By Lucia Mutikani
WASHINGTON - The U.S. economy grew more slowly than first thought in the third quarter, but house prices rose for the fifth month in September and U.S. consumer confidence was up in November in data published on Thursday, suggesting a slow economic recovery is still intact.
The U.S. Commerce Department's second estimate of third quarter economic output, published on Tuesday, showed growth at a 2.8 percent annual rate, rather than the 3.5 percent pace it estimated last month.
It was still the fastest pace since the third quarter of 2007, reflecting government fiscal stimulus, but slightly less than expectations for a growth pace of 2.9 percent.
The return to growth in the third quarter, after four straight quarters of declining output, probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7 percent rate in the April-June period.
Gross domestic product growth was constrained by consumer spending that was not as robust as first thought, and by strong imports and weak investment in commercial buildings. But corporate profits surged as businesses raised output even as they were cutting payrolls.
"This will be a muted, slow recovery and it will be strewn with setbacks," said T.J. Marta, chief market strategist at Marta on the Markets. "I don't have a lot of high hopes."
U.S. stocks opened lower, while Treasury debt prices rose slightly after the report was released.
U.S. DEMAND SATED BY IMPORTS
An upward revision to U.S. imports was one factor behind the softer than previously reported GDP figures, showing more domestic demand was sated by overseas production.
Imports jumped at 20.8 percent annual rate, the biggest gain since the second quarter of 1985, instead of 16.4 percent. They knocked 2.53 percentage points off the change in GDP.
Another drag came from the construction of nonresidential structures, which dropped at a 15.1 percent pace rather than 9 percent, as previously reported, highlighting the problems in the commercial property market and shaving just over half a percentage point off GDP growth.
Consumer spending, which normally accounts for more than two-thirds of U.S. economic activity, rose at a 2.9 percent rate, instead of the 3.4 percent pace reported last month. It was the biggest rise since the first quarter of 2007 and represented a turnaround from a 0.9 percent second quarter fall.
Businesses also reduced inventories at a slightly faster rate than had been anticipated. While that revision trimmed third quarter GDP growth, analysts said it helps lay the groundwork for future production.
"That sets up for a better fourth-quarter GDP with more restocking," said John Canally, economist at LPL Financial in Boston.
Excluding inventories, GDP rose at a 1.9 percent rate instead of 2.5 percent. That marked a pickup from the 0.7 percent pace in the second quarter, but showed demand was somewhat lackluster.