US economic growth revised to 3.3%

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The US economy expanded at a stronger-than-first-reported 3.3 per cent annual rate in the second quarter, as consumer spending and net exports were more robust than initially estimated and inventories fell less sharply, a government report showed today.

Gross Domestic Product or GDP for the April-June period was first reported as growing at a 1.9 per cent rate. Analysts polled by Reuters were expecting the annual rate to be revised to 2.7 per cent.

GDP grew at a sluggish 0.9 per cent rate in the first quarter after a 0.2 per cent contraction in the final three months of 2007. The fourth quarter of last year was the weakest since July-September 2001, when the economy was in recession.

Consumer spending, which fuels two-thirds of the US economy, grew at an upwardly revised 1.7 per cent rate rather than the 1.5 per cent pace first reported.

Meanwhile, exports grew at a 13.2 per cent annual rate instead of the 9.2 per cent pace initially estimated.

Many analysts believe that exports and consumer spending, which have helped the economy skirt recession, are likely to taper off in the second half of the year as spending from government stimulus checks dries up and weakening global growth and a stronger US dollar crimp demand from abroad.

In evidence the severe housing slump continues to weigh on the economy, residential construction was down by an annual 15.7 per cent pace, slightly more than the 15.6 per cent decline reported earlier.

Meanwhile, inventories dipped at an annualised $49.4bn in the quarter, rather than the $62.2bn drop first reported, a possible sign that businesses are less pessimistic than believed.