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U.S. economy grows weaker than expected 3Q

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WASHINGTON (Dow Jones) – The performance of the U.S. economy is in the third quarter grew less strongly than previously thought, mainly due to downward revisions of investment and stock movements. As the U.S. Department of Commerce on Tuesday announced the third release, increased real gross domestic product (GDP) over the previous quarter at an annualized 2.2%. (Photo: Schneider)

Economists had forecast a rise of 2.7% in the second and first publication had growth rates of 2.8% and 3.5% have been mentioned. In the second quarter U.S. GDP was down by an annualized 0.7%. Postbank economist Fabienne Riefer called the result compared with the initial estimate of 3.5% "somewhat disappointing".

"At the downward revisions occurred mainly in the stock, which has now Braked degradation ultimately contributed about 0.7 percentage points to the bottom line," she analyzed. At a slightly worse result, it had come but also in private consumption, business investment and the investment in equipment and the government consumption, "said Riefer.

Carried in the reporting quarter growth was mainly led by private consumption, the gross and the State of consumption, the growth contribution of 2, 0.5 and 0.6 percentage points. The net exports yielded no positive contribution to growth. The braking destocking contributed 0.7 points.

The private consumption expenditure, mainstay of U.S. GDP, rose from the previous quarter being 2.8% (: up 2.9%). Overall, the real final demand grew with an increase of 1.5% weaker than indicated in the second publication (up 1.9%). The growth in corporate profits was slightly lower than previously expected with 13.8% (up 14.5%).

Rob Carnell of ING bank said quite relaxed about the repeated downward revision. He pointed out that even this "final" data may be revised in the coming quarters yet. It also assumes that U.S. GDP has increased in the fourth quarter with an annualized rate of 3%.

As the Commerce Department announced further increased the inflation measure used as an alternative deflator for personal consumption expenditures (PCE) in the third quarter to an annualized 2.6% over the previous quarter. In the second release was recorded an increase of 2.7%. In the second quarter had the PCE deflator increased by 1.4%. Above all, the Fed prefers the PCE deflator in its monetary policy analysis.