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Thursday, December 22, 2011

Third Quarter GDP Growth Revised Down to 1.8%

GDP growth in the third quarter was revised down to 1.8% SAAR from 2.0% reported last month. This is the second downward revision of third quarter GDP growth which was initially estimated at 2.5%. Even with the downward revision, the growth is the strongest we have seen so far this year and much better than the 0.36% growth seen in the first quarter.


The downward revision was driven by a downward revision to consumption, primarily in healthcare services. There was also a slight upward revision of imports, which helped lower GDP. These factors were partially offset by a small upward revision in inventories, fixed investment, and exports.

The acceleration of GDP growth from the second quarter to the third quarter was due primarily to increased consumer spending and business investment. In addition, state and local governments provided a smaller drag and exports improved.

Corporate profit growth fell in the third quarter to 1.7% (annualized), from 3.3% in the second quarter. Profits were up 7.5% over this time last year.

Read the report.

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