The government revised its estimate of economic growth in the third quarter down slightly Tuesday, as inventory adjustments and weaker spending by businesses offset still-healthy consumer activity.
The government revised its estimate of economic growth in the third quarter down slightly Tuesday, as inventory adjustments and weaker spending by businesses offset still-healthy consumer activity.
At an annualized rate of 2 percent, the pace of growth in the third quarter isn’t too far out of line with the tepid gains registered since the recovery began in mid-2009. Last year, the U.S. economy — as measured by the gross domestic product — grew by 2.4 percent; in 2013, it expanded at a 1.5 percent rate.
Economists had expected third-quarter growth to be revised slightly downward to an estimated rate of 1.9 percent.
After a big buildup of goods in warehouses and on shelves in the first half of 2015, inventories proved to be a headwind in the third quarter. Businesses have also been cautious about spending, while plunging oil prices have prompted energy companies to cut back on new investments.
Economists expect the growth rate in the current fourth quarter to be similar to that of the third quarter, with the economy’s overall rate of expansion for 2015 expected to be just over 2 percent.
One major source of weakness recently has been the strong dollar, said Torsten Slok, chief international economist for Deutsche Bank Securities in New York.
The dollar’s rise hurts U.S. companies by making U.S. exports more expensive for overseas buyers. At the same time, the picture for growth in both Asia and Europe remains cloudy.
“Employment has been holding up but the big economic story has been downward pressure from a strong dollar,” Slok said. “And the rest of the world, unfortunately, is still weak.”
Last week’s interest rate increase by the Federal Reserve, which came as some other central banks overseas were maintaining more accommodative monetary policies, could cause further gains in the dollar.
Still, the less-than-sizzling headline numbers belie the strength of many sectors in the United States.
Consumer demand has been rising at a rate of roughly 3 percent. Similarly, employers continue to hire at a steady pace.
A fresher take on the economy’s prospects will come Wednesday, when the Commerce Department reports data for consumer spending and income in November. Economists are forecasting a pickup in spending, with incomes growing more modestly.
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