US economic growth revised downward

US economic growth revised downward
WASHINGTON, Sept 28
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A cooling housing market helped slow U.S. economic growth more steeply than expected in the second quarter, the government reported on Thursday, while corporate profits grew feebly.

Analysts said a slowdown in the pace of expansion could extend into 2007 and Federal Reserve policy-makers caution they expect economic growth in the second half to drop below long-term trend rates.

Gross domestic product or GDP that gauges total economic activity within U.S. borders advanced at a revised 2.6 percent annual rate in the second quarter, down from the 2.9 percent estimated a month ago.

That was less than half the first quarter’s 5.6 percent rate.

Wall Street economists surveyed by Reuters had expected second-quarter GDP to be unchanged at 2.9 percent. But the Commerce Department said inventory building was weaker than first thought and imports of services - which detract from domestic output -- were higher.

The dollar’s value softened briefly after the GDP data were published while prices for Treasury securities edged up but then turned modestly lower. Stock prices eased.

David Sloan, senior economist with 4Cast Ltd. in New York, described the GDP report as “marginally weaker” and said most of the revisions were minor. “It is consistent with the direction we are generally seeing from other data, of further slowing in the third quarter,” he added.

While growth is losing some steam, its deceleration is not yet rapid enough to raise recession fears.

Separately, the Labor Department said new claims for jobless benefits fell by 6,000 in the week ended Sept. 23 to a seasonally adjusted 316,000, a sign of a relatively healthy hiring environment.