3Q GDP growth revised down to 2%
Lower readings on private inventory investment, nonresidential investment, and consumer spending led the Commerce Department to lower its estimate for gross domestic product growth for the three months ended Sept. 30. GDP growth for the quarter was revised down to 2% from a prior reading of 2.5%. The economy rose at a rate of 1% in the second quarter. Paul Ashworth, chief U.S. economist of Capital Economics, said the third-quarter revision "was mainly due to an upward revision to the negative contribution from inventories." "Accordingly, we are now likely to see an even bigger gain in (fourth-quarter) GDP as inventories are rebuilt," Ashworth said. "Current quarter GDP is on track to increase by more than 3%" on an annual rate. Analysts polled by Econoday estimate GDP growth of 2.4% for the third quarter with a range of estimates from 2% to 2.9%. The Commerce Department said corporate profits rose nearly $40 billion in the third quarter on top of the second-quarter increase of $61.2 billion. And the Federal Deposit Insurance Corp. said Tuesday that American bank earnings climbed 48% for the third quarter. Still, Simon Hunt Strategic Services, based in Surrey, England, said the world economy will go through a period of deleveraging through at least the year 2018, as the United States slips into another recession either in 2012 or 2013. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.