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GDP growth less than forecast; inflation cools

Economic growth was a touch higher than previously estimated in the third quarter, but below expectations as a rise in the pace of inventory accumulation was offset by downward revisions to consumer spending, a government report showed Wednesday.

Economic growth was a touch higher than previously estimated in the third quarter, but below expectations as a rise in the pace of inventory accumulation was offset by downward revisions to consumer spending, a government report showed Wednesday.

Gross domestic product growth was revised up to an annualized rate of 2.6 percent from 2.5 percent, the Commerce Department said.

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 2.8 percent pace. The economy expanded at a 1.7 percent rate in the second quarter.

But data so far suggests growth accelerated in the fourth quarter and will remain supported in 2011 by an $858 billion tax deal, which will help plug the gap from the fading boost from the rebuilding of inventories by businesses and winding down of the government’s $814 billion stimulus package.

The tax plan, widely viewed as a second fiscal stimulus for the economy, is seen complementing the Federal Reserve’s program to buy $600 billion worth of government bonds to shore up the recovery.

 
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