WASHINGTON — The U.S. economy expanded less than initially estimated last quarter as consumer spending trailed forecasts, raising concerns about the strength of the recovery.
Gross domestic product grew at a 2.8 percent annual pace, the Commerce Department said Tuesday in Washington, compared with its prior estimate of 3.5 percent.
Consumers surveyed by the New-York based Conference Board were more pessimistic about the outlook for jobs in November and scaled back their buying plans, even as the group’s overall gauge of confidence rose.
Stocks declined around the world on indications that an unemployment rate projected to stay above 10 percent through the middle of next year will curb spending, which makes up 70 percent of the economy, as the holiday shopping season begins.
Labor-market weakness is one reason why the Federal Reserve under Chairman Ben Bernanke this month repeated its promise to keep interest rates near zero for an “extended period.”
“I would expect consumer-spending growth to be relatively limited in the coming quarters,” said Guy Le Bas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who accurately forecast the GDP figure. “The recovery’s not going to be quick, and it’s not going to be painless.”
The pace of economic growth matched the median forecast of 78 economists in a Bloomberg survey.
Consumer spending rose at a 2.9 percent pace, compared with the 3.2 percent rate forecast by economists and a 0.9 percent decline in the prior quarter.
The economy has lost 7.3 million jobs since the recession began in December 2007. The unemployment rate last month reached a 26-year high of 10.2 percent, up from 7.6 percent when President Barack Obama took office in January.
