GDP Revised Down, Still Best in Two Years

Washington, DC, Dec. 22, 2009--The U.S. economy grew at the fastest pace in two years during the third quarter, but the revised annual growth rate of 2.2% was much slower than what the government initially reported.

U.S. real gross domestic product increased for the first time since the spring of 2008, the Commerce Department said Tuesday.

Before growing in the June-through-September quarter, the U.S. economy had shrunk for four straight quarters -- the first time it had done so since the Great Depression.

The economy contracted 0.7% in the second quarter after having plunged by 6.4% in the first quarter and by 5.4% in the fourth quarter of 2008. The figures are seasonally adjusted and adjusted for price changes.

Consumer spending, boosted by the government's so-called cash-for-clunkers program, was the main engine of growth in the third quarter.

Home building contributed to growth for the first time in nearly four years.

Business investment declined as a small increase in capital spending on equipment and software was overwhelmed by another large drop in investments in structures.

Third-quarter GDP was originally estimated two months ago at a 3.5% annualized rate but was revised down to 2.8% growth in last month's estimate.