Archive for Friday, December 22, 2006

Housing slump weighs on economic activity

December 22, 2006

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— The economy felt the strain of the housing bust and lost momentum in the late summer, with more sluggish performances expected in the months ahead.

Economic growth slowed to a 2 percent pace in the July-to-September quarter, the Commerce Department reported Thursday.

That was slightly worse than the 2.2 percent annual rate the government estimated a month ago, yet better than the anemic 1.6 percent rate initially calculated for those months.

Investment in home building declined at a 18.7 percent rate - even more than previously estimated - and was the largest cut in 15 years. That shaved 1.2 percentage points off third-quarter growth, the most in nearly 25 years.

Economists say the gross domestic product in the October-to-December quarter could come in at a pace of 1.7 percent to 2.5 percent, or slightly higher.

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