The American economy grew less quickly in the third quarter of the year than official data has previously suggested, the US Commerce Department admitted yesterday, as new figures on house prices and consumer confidence suggested the country was coming out of recession only slowly.
US GDP grew by 2.8 per cent on an annualised basis over the three months to the end of September, the Commerce Department said, rather than the 3.5 per cent it had previously estimated. Weaker than expected consumer spending, in particular, was responsible for the revision, though the downgrade was broadly in line with economists' expectations.
"This is a slow motion recovery," said Brian Bethune, chief US economist at IHS Global Insight, though he added: "Let's be thankful we've got a recovery that is in train, some positive growth and no inflation."
Analysts also took some solace from the latest data on corporate profits, which were up by 13.4 per cent in the third quarter, the best performance from businesses for five years.
Despite having spent less than previously thought, consumer confidence now seems to be improving in the US, with figures from the Conference Board suggesting further gains during November. One positive influence has been a rebound in house prices, with the Case-Shiller home price index yesterday indicating a 0.3 per cent increase in property valuations during September.
Nevertheless, the US economic recovery continues to be underpinned by government spending, with an 8.3 per cent increase in federal spending during the third quarter contributing 0.7 percentage points of GDP growth.
Brian Fabbri, an analyst at BNP Paribas, said he expected the recovery to gather some pace during the final quarter of the year. "After incorporating these revisions we continue to forecast that real GDP will grow in the fourth quarter by an estimated 3.5 per cent boosted by rising consumption and a significant reduction in inventory de-stocking," he said.