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U.S. GDP revised lower
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December 21, 2000: 12:56 p.m. ET
Government says growth of 2.2 percent slowest in four years
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NEW YORK (CNNfn) - The U.S. economy grew at its slowest rate in four years in the third quarter, the government said Thursday in its final reading on gross domestic product for the July-September period.
The Commerce Department cut its estimate of GDP -- the total output of goods and services -- to a 2.2 percent growth rate in the quarter from the 2.4 percent reported a month ago. GDP is the broadest measure of the nation's economy.
That was less than half the second quarter's sizzling 5.6 percent growth rate and the slowest since a 2 percent rate in the third quarter of 1996.
The final third-quarter numbers came in even weaker than Wall Street analysts predicted. Analysts had expected a final reading of 2.4 percent, according to a survey by Briefing.com.
A key index of inflation rose 1.8 percent, which was a shade below Wall Street forecasts of 1.9 percent. Weaker exports contributed to the reduced reading, the Commerce Department said.
The report is the latest pointing to much slower growth in the world's largest economy. The Federal Reserve said Tuesday that the economy now faced more risk of a downturn than from inflation, signaling it was set to cut rates next year in a bid to prevent a recession after nearly 10 years of growth – the longest expansion in U.S. history.
Kathleen Camilli, chief economist at Tucker Anthony, told CNNfn's Before Hours that the Fed could potentially step in even before its next scheduled meeting in late January to reduce interest rates if the markets take a major tumble before then.
She has lowered her estimate of fourth-quarter GDP to 2.8 percent from 5.5 percent, "because indeed it looks like the Christmas selling season is turning out to be a little lackluster."
The slowing economy has sparked debate between Clinton officials and the incoming administration of president-elect George W. Bush, who is angling for tax cuts as a centerpiece of his program for growth. Bush said Wednesday he saw "warning signs of a possible slowdown," prompting a top White House economic aide to accuse him of "talking down" the economy for political reasons, Reuters reported.
White House economic adviser Gene Sperling said Thursday that Bush was not being "serious and disciplined" about the economy and said that his comments were spreading "fear and anxiety" about the economy, the news agency reported.
Separately, new jobless claims rose to 354,000 last week from 320,000 the prior week, the Labor Department said, a slight sign of weakness in what is still seen as a tight job market. 
-- from staff and wire reports
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