U.S. third-quarter GDP growth is revised downward, but it's still growth
A Bloomberg News economists survey had expected the revised quarterly figure to increase 2.8%. The Commerce Department revises its GDP estimate for each quarter as it receives more complete information than was previously available.
Despite the 2.8% growth, the nation's pronounced recession has taken a toll. Over the previous four quarters, the U.S. economy contracted 3.8% -- the most severe downturn since the end of World War II -- including a 0.7% decline in the second quarter and a 6.4% plunge in the first. In 2008, the world's largest economy grew a scant 1.1% -- well below capacity.
In current-dollar terms, U.S. GDP rose 3.3% in the third quarter to an annual rate of $14.26 trillion. Corporate profits -- aided by job cuts -- surged at a 10.6% annualized rate, consumer spending increased 2.9% and sales rose 1.9%. But business investment fell 4.1%.
Today's revision was in line with the consensus estimate, but as noted, that level of growth is still strong enough to keep the recovery narrative in place. The U.S. economy is being propelled by increased business efficiency, exports and government spending. Further, while the pessimist would argue that the third-quarter growth rate is lower than it should be for the initial stage of an expansion, the optimist would argue the U.S. economy is growing again, which will eventually lead to an end to layoffs, the resumption of hiring, larger increases in consumer spending and a return to self-sustaining GDP growth.