RJ and Makay

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The U.S. economy grew at a slower pace than previously estimated in the third quarter as companies reduced their inventories and reduced investment, according to the Commerce Department.  The government cut its estimate of growth domestic product (GDP) to 2.0%, from a first estimate of 2.5%, based on new inventory and trade data.  Surveyed economists had expected the government to trim its estimate to 2.3%.

According to the U.S. Department of Commerce, the economy grew at a 3.2% annualized rate in the fourth quarter of last year, raising hopes that the recession is truly a thing of the past and 2011 will be even better than 2010. The fourth quarter growth rate is more than 20% better than the 2.6% rate in the previous quarter and the best quarterly increase since the start of 2010.

For all of last year, the economy grew 2.9% — the most since 2005. A key driver of that growth was increased consumer spending, which rose at 4.4%. That pace, the fastest since 2006, was due mainly to increased purchasing of furnishings, appliances, cars, and clothes.