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.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.