The U.S. economy grew at a much slower pace than first thought in the fourth quarter, weighed down in part by slower spending by businesses.
The Commerce Department said Wednesday that fourth-quarter gross domestic product came in at 2.2 percent, well below the 3.5 percent first reported. Indeed, the downward revision marked one of the largest on record. The government said the average revision is 0.5 percentage point, adding that a revision of 1.3 percentage points or larger has occurred only seven times in 30 years.
The revision primarily reflected downward revisions to private inventory investment and to personal consumption expenditures for goods, as well as an upward revision to imports of goods.
While the data may come as a disappointment to those who had predicted higher growth, it nevertheless tops the expansion posted in the third quarter, when growth was 2.0 percent.For all of 2006, the economy grew at a 3.3 percent clip, the strongest showing in two years.
The numbers come on the heels of Tuesday's huge selloff on Wall Street, where the Dow Jones Industrial Average fell by 3.3 percent, or 416 points, the largest percentage decline in about four years.