Consumer sentiment dips going into holidays (Reuters)
Reuters - U.S. consumer sentiment slipped in December but was not far from the year's highs, a report said on Friday, suggesting Americans were guardedly optimistic about the economy in the holiday season.
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US GDP revised down to show 2.0 percent growth pace (AFP)
by Rob Lever Thu Dec 21, 11:56 AM ET
WASHINGTON (AFP) - US economic growth has been a bit more sluggish than earlier estimated in the third quarter, growing at a 2.0 percent annualized pace, according to revised data.
The Commerce Department, in its final revision of growth in the July-September quarter, notched down its earlier estimate of a 2.2 percent annualized pace on Thursday.
Wall Street analysts had on average expected no revision from the 2.2 percent figure.
In any case, the growth was the slowest since the final quarter in 2005 and a deceleration from the 2.6 percent pace in the second quarter.
The revision came from a slight downward adjustment in the estimate of consumer spending growth in the quarter to 2.8 percent instead of 2.9 percent.
The department said the slowdown in consumer spending was driven by better data on medical care spending, which was revised lower, and by a steeper slump in real estate spending.
That offset slight upward revisions to durable goods spending.
The latest revision left unchanged the picture of an economy that has shifted to a slower growth pace, held back by slumping real estate but still underpinned by consumer and business spending.
Spending on residential property plunged 18.7 percent, revised from an earlier estimate of an 18 percent drop, the steepest drop since 1991.
Nariman Behravesh, chief economist at Global Insight, said however that despite the troubled housing sector, "the spillover effects to other parts of the economy continue to be limited."
Business investment grew 10 percent, unrevised from the last estimate.
An inflation index linked to GDP showed a 2.4 percent increase in prices, and was unrevised after a four percent jump in the second quarter.
Core prices excluding food and energy were up 2.2 percent, slightly ahead of the Federal Reserve's unofficial target but suggesting that the central bank's view of easing inflationary pressures is correct.
The Fed, which halted a string of rate increases in August, has indicated it may lift interest rates further if inflation kicks back up, but most economists see the next move as a rate cut to help stimulate flagging growth.
Robert Brusca at FAO Economics said the GDP report also lowered the estimate for US productivity.
"GDP is old news, but what stings in this report is the marginal lowering of already weak productivity growth that will result from weaker GDP," he said.
"Weak productivity growth is bad news, and even weaker growth is worse news -- even if it is a marginal revision. This revision does not obviate or reduce but rather worsen this new trend."
While some analysts say the GDP data is backward-looking, the Conference Board said its index of leading economic indicators rose 0.1 percent in November, suggesting more sluggish growth ahead.
"The slower economy of the second half of 2006 might continue into the first half of 2007. But it may not get any slower," said Conference Board economist Ken Goldstein.
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November housing starts up (Reuters)
Reuters - The pace of U.S. home building rose in November as new home starts climbed 6.7 percent, rebounding from a sharp decline in October while building permits fell 3 percent, a government report showed on Tuesday.
Reuters - The pace of U.S. home building rose in November as new home starts climbed 6.7 percent, rebounding from a sharp decline in October while building permits fell 3 percent, a government report showed on Tuesday.
