09:19 ET<\/span>
\n<\/span><\/p>\nThe US Department of Commerce has unexpectedly cut its estimate of fourth-quarter growth to an annualised 2.8%, from 3.2% previously.<\/p>\n
Analysts had instead expected the figure to be revised up slightly to 3.3%.<\/p>\n
Lower government spending than previously estimated was the main reason for the downward revision.<\/p>\n
Economic growth for the whole of 2010 was also revised down slightly, from 2.9% to 2.8%.<\/p>\n
As well as lower state and local government spending during the final three months of last year, consumer spending grew at a slower rate than previously estimated.<\/p>\n
The latest figure for final-quarter growth is the second estimate – the figure will be revised again next month.<\/p>\n
Revised figures also released on Friday showed that the UK economy shrank by 0.6% in the fourth quarter compared with the original estimate of a 0.5% contraction.<\/p>\n
Unemployment<\/span><\/p>\nDespite the downward revision, US economic growth still picked up in the final quarter, as growth in the previous quarter was 2.6%.<\/p>\n
A rise in consumer spending contributed to the growth, as did falling imports, rising exports and a rise in commercial real estate.<\/p>\n
There are widespread concerns in the US that economic growth is not strong enough to bring down the high unemployment rate, which currently stands at 9%.<\/p>\n
Earlier this month, Federal Reserve Chairman Ben Bernanke estimated it would take about 10 years for the unemployment rate to fall to a more sustainable 5%-6% at current economic growth rates.<\/p>\n
The latest GDP revision figures could raise questions about future growth, analysts said, given the government’s plans to cut spending in order to bring down the country’s large budget deficit.<\/p>\n
President Obama has outlined plans to cut $1.1tn (\u00a3620bn) from the deficit over the next 10 years.<\/p>\n
The deficit – the amount by which government expenditure exceeds its income in any given year, expressed as a percentage of GDP – currently stands at 9%.<\/p>\n<\/p><\/div>\n<\/p>\n
Original post:
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