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December 22, 2009 / J. Shaw

Third-Quarter Growth Weaker Than First Thought

The Commerce Department said the economy expanded at an annual rate of 2.2 percent from July through September, down from the original forecast of 3.5 percent, tempering some of the enthusiasm about the speed of economic renewal. The downward revision was well above average, but analysts still foresee stronger growth in the fourth quarter, as exports rise and an improved jobs market encourages consumer spending.

“We did get off to a slightly slower start than we had thought,” said Nigel Gault, chief United States economist for IHS Global Insight. “That would be very worrying if we didn’t have evidence that we had done well in the fourth quarter.”

In a separate report, the fragile housing sector showed signs of firming up, with existing home sales climbing 7.4 percent in November to a seasonally adjusted annual rate of 6.54 million, up from 6.09 million in October, exceeding expectations. Economists cautioned that the results reflected a rush to take advantage of an $8,000 tax credit for first-time home buyers and would probably taper off in December.

“It’s good news but we’re still in a very depressed housing market,” said Guy D. Cecala, publisher of Inside Mortgage Finance, a weekly newsletter. “We need a bunch more of these increases before we can say we have a healthy or stabilized housing market.”



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