Economy's return to growth last quarter probably less energetic than first thought

WASHINGTON — Remember the economy’s return to growth last quarter? Well, it probably wasn’t as energetic as first thought.

A government report due out Tuesday morning is expected to show that the economy expanded at a pace of 2.9 percent from July through September, according to Wall Street economists surveyed by Thomson Reuters. If they are right, it would mark a slower expansion than the 3.5 percent pace reported a month ago. Most of that rebound reflected federal support for spending on homes and cars.

The main forces behind the expected third-quarter downgrade: commercial construction was weaker, the nation’s trade gap was more of a drag, businesses trimmed more of their stockpiles and consumers didn’t spend as much.

So, the good news is the economy finally started to grow again, after a record four straight losing quarters. The bad news: The rebound, now and in the months ahead, probably will be lethargic.

Federal Reserve officials and other economists say growth won’t be strong enough to quickly drive down the nation’s unemployment rate. The nation’s current 10.2 percent jobless rate marks only the second time in the post-World War II period that unemployment has topped 10 percent.

The Associated Press