US GDP suffers shock revision downwards in Q3

US GDP was revised down from 2.5% to 2% in the third quarter, the Commerce Department said today.

The US economy expanded less than previously estimated between July and September as the risk of another recession prompted companies to cut inventories for the first time in almost two years.

Most economists expected no revision.

While lower, the expansion of the economy is still higher than the previous two quarters of 2011, when GDP growth came in at 1.9% in Q1 and 1.3% in Q2.

The US Department of Commerce also revised upwards Q2's figure from 1%.

It said the rise was due to increased personal consumption spending.

"The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and federal government spending," it said.

"That were partly offset by negative contributions from private inventory
investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased."