US economic growth revised down

The US economy grew by far less than originally forecast between July and September, according to revised official figures.

The latest estimate said the economy grew at an annual pace of 2.8%.

That compared with the 3.5% the Department of Commerce initially forecast earlier this month.

The change in the gross domestic product figure came partly because imports, which count as negative, were higher than thought.

Imports increased at an annual rate of 21%, the biggest gain since the second quarter of 1985, and a big jump on the 16% first thought.

US GDP is expressed as an annualised rate, or annual pace, which shows what the annual rate would be if the latest change continued for the rest of the year.

Following the downward revision, the main US share index, the Dow Jones, ended Tuesday trading down 17 points or 0.2% to 10,434. Further hurdles

Economic growth, though, was helped by a substantial government spending plan, including a scrappage scheme to boost car sales, and higher investment in residential property. The figures still indicate the first quarterly growth in GDP since the second quarter of 2008, and appear to have put an end to the worst recession in the US for 70 years.

But some economists think there could be further setbacks.

"The consumer still isn't there. Other data suggest that the effect from 'cash for clunkers' and first-time home buyer credits are fading," said independent market strategist TJ Marta.

"This will be a muted, slow recovery and it will be strewn with setbacks."

The latest figures on the mood of the US consumer bear out this view. Shortly after the GDP numbers were released, the Consumer Confidence Board brought out a downbeat report.

Although its Confidence Index had risen, the board said income expectations were "very pessimistic" and consumers were in "a very frugal mood".

And the figures cast doubt on how strong Christmas spending will be this year.

Meanwhile, released minutes from the latest Federal Reserve meeting earlier this month showed that the central bank considers the US economic recovery to be durable.

However, at the same time it warned that unemployment will remain a problem.

Figures released earlier this month showed that the unemployment rate in the US rose to 10.2% in October, its highest rate since April 1983.