US GDP 3Q 2011 unexpectedly revised downward to 1.8

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"We're more concerned" this number "came in a quarter when the US consumer cut their savings rate from 5.0% to 3.3%."

12/22/11, "Q3 GDP: Weaker Than First Thought," Wall St. Journal

"The U.S. economy expanded less than thought during the third quarter as consumer spending fell short of an earlier estimate, though signs point to stronger growth in the final months of the year. Gross domestic product, the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.8% in the July to September period. While still the strongest performance of the year, the Commerce Department’s third estimate of GDP is lower than the previous reading of 2.0%.

Economists surveyed by Dow Jones Newswires had forecast 2.0% growth. The economy’s lower growth level was largely due to a downward revision of how much consumers spent, especially for services such as health care. The latest estimate showed personal consumption expenditure, which accounts for about two-thirds of spending in the economy, rose by 1.7% in the third quarter. That compares to a previous estimate of a 2.3% increase. Here’s some reaction:

Peter Newland, Barclays Capital: All in all, much was as expected outside the downward revision to services consumption, but the softer pace of consumer spending sets a less positive backdrop for growth in Q4. Tomorrow’s personal income and spending release will reveal the change this makes to the monthly profile of consumption during Q3, which in turn could reduce the positive base effect (and hence lower our GDP tracking estimate) for Q4.

David Semmens, Standard Chartered: While the downward revision to the consumption should help keep the consumer’s woes in mind, we are more concerned that this comparatively slow increase came in a quarter when the US consumer cut their savings rate from 5.0% to 3.3%. We still maintain that the consumer will stay supportive for growth, especially as hiring improves albeit modestly in 2012, but the continuation of the deleveraging process

• should keep any optimism in check.

via Drudge