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US Economic Growth Revised Downward

New numbers show GDP grew at a slower pace in the third quarter than the original estimate of 3.5 percent

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As the all important holiday shopping season approaches, worries over the U.S. economy remain front and center.  New numbers released by the Commerce Department on Tuesday show the economy grew at a 2.8 percent annual rate in the third quarter - slower than original estimates, which pegged the nation's growth at three and a half percent.  Many economists believe growth in the fourth quarter will remain weak as consumers rein in spending.

For retailers, it's the start of the make-or-break holiday shopping season.

But with unemployment running high, consumer spending, which accounts for two thirds of the U.S. economy, is likely to be muted.

Compared to last year, ABC business analyst Melody Hobson says a smaller decline in holiday spending will seem like an improvement. "The National Retail Federation is saying flat to slightly down, maybe down one percent, which is actually good news compared to the brutal Christmas we had last year when sales were down 3.4 percent," she said.

Analysts say some of the insecurity is showing up in revised GDP numbers for the third quarter -  down seven tenths of a percent from earlier estimates - in part due to weaker spending and rising unemployment.

Some critics say President Obama has been too focused on the war in Afghanistan and health care reform - and not enough on the economy.  "He is under so much pressure not only to get a major legislative initiative, which is health care reform," Anne Mathias said. "And at the same time he has to address concerns that he hasn't been doing enough to focus on the real underlying problems in the economy."

But President Obama, who convenes a job summit in December, says his administration is looking at all options. "I will not rest until businesses are investing again and businesses are hiring again and people have work again," Mr. Obama said.

Economists say there is reason for optimism.  The U.S. housing market, a key factor in the economic meltdown, has shown signs of recovery.  And consumer confidence has improved slightly.

Economist Michelle Meyer says the recovery may be slow - but it is happening.
"We think that by early next year, you should start to see hiring outpace firing, and actually see aggregate job creation in the economy," Meyer said.

Some economists predict the nation's unemployment rate, now at 10.2 percent, could rise as high as 11 percent.  And some say it could take up to four years before employment returns to normal levels.

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