WASHINGTON — The U.S. economy expanded more slowly than economists expected in the third quarter, when it grew at an annual rate of 2.6% according to the third and final estimate Wednesday from the Commerce Department.
The estimate was revised upward from a prior 2.4% growth rate due to a stronger contribution from inventories. Economists forecast a 2.8% pace.
The annualized expansion rate of the U.S. economy was 1.7% in the second quarter and 3.7% in the first quarter.
The rate of expansion for core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, was revised downward to a record low of 0.5% from the 0.8% rate previously reported.
The final third-quarter growth rate was the lowest reading for core PCE since quarterly records began in 1959.
Economists expected core PCE to increase 0.8%. The third-quarter expansion rate for core personal consumption expenditures compares with annualized growth paces of 1.0% for the second quarter of this year and 0.6% for the fourth quarter of 2008, when the recession prompted gross domestic product to shrink at a 6.8% rate. The 18-month recession began in December 2007.
“The economy appears to be reaccelerating after nearly stalling last spring and summer,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “Inflation remains particularly low. Look for bond yields to fall back a bit in the weeks to come, as the reality that the economy is reaccelerating with little threat to inflation sinks in.”