Updated from 8:47 a.m. EDT
The pace of growth in the U.S. economy during the last three months slowed considerably from the second quarter and hit its lowest rate since 2003, the government said Friday.
According to the advance gross domestic product report, the economy expanded at a 1.6% annual rate in the third quarter, down from 2.6% in the previous quarter, as the housing market cooled off.
On average, economists surveyed by
were expecting a decline to about a 2% growth rate from July through September.
The Commerce Department's Bureau of Economic Analysis said growth remained positive owing to contributions from personal consumption expenditures, exports, equipment and software, nonresidential structures, and state and local government spending.
The core personal consumption expenditures deflator rose 2.3% year over year, a bit less than expected, and the overall price deflator was up 2.5%. Weighing the heaviest on GDP was a 17.4% drop in residential investment.
After the report, Treasuries rose, and stock futures weakened.
The data suggest that the
two-year rate-tightening campaign that raised the fed funds target from 1% to 5.25% is succeeding in keeping the economy from overheating. Fed policymakers gathered earlier this week and left rates at that level for the third consecutive meeting. The last hike was in June.
The report is the first of three that will ultimately be released on third-quarter GDP. The next report, which will be based on more comprehensive data, is scheduled for Nov. 29.