4Q GDP Revised Down to 2.2%

Washington, DC, February 28, 2007--The economy's now grown at a rate of less than 3% for three quarters in a row, government data show, after a significant downward revision to fourth-quarter estimates.

The economy grew at a real annual rate of 2.2% in the three months of 2006, not at the 3.5% rate reported last month, the Commerce Department said Wednesday.

Real gross domestic product has grown 3.1% over the past four quarters and grew 3.3% in 2006 compared with all of 2005. The economy grew 2% in the third quarter.

Over time, growth below the economy's potential of about 3% should reduce capacity restraints in the economy that could fuel inflation. The U.S. unemployment rate has moved marginally higher, but it's still relatively low at 4.6%. Industrial capacity utilization rates have fallen as the factory sector slowed.

At the same time, core inflation came in lower than projected a month ago.

Core inflation, as measured by the personal consumption expenditure price index excluding food and energy, rose at a 1.9% annualized rate in the quarter, revised down from 2.1%. In the past year, the core PCE price index has risen 2.2%, revised down from 2.3% reported last month.

Economists had expected a large revision in GDP down to 2%.