Second Quarter GDP Revised Downward

Washington, DC, Sept. 26, 2008--Weaker spending by consumers and businesses in the second quarter caused a donward revision od GDP in the second quarter.

Gross domestic product grew at a 2.8 percent annualized pace in the quarter, revised down from the previous estimate of 3.3 percent, the Commerce Department said in its third and final GDP estimate.

Economists had been looking for GDP to be revised up to 3.4 percent growth.

The economy had expanded at a 0.9% rate in the first quarter.

Economists are increasingly convinced that the economy will enter a recession as the shock from the credit crunch hits consumers already struggling with falling home prices, high oil costs and a weakening labor market.

Economists have been steadily revising downward their estimates of third-quarter growth to about a 1 percent annual rate. Estimates of the fourth quarter are even grimmer, with many forecasting outright negative growth.

The economy has grown just 2.1 percent in the past four quarters.

Real consumer spending increased at an annualized 1.2 percent in the second quarter, compared with the 1.7 percent previous estimate.