Economic growth in the United States during the latest fiscal quarter slowed to its slowest pace in over three years, as a big decline in new home prices took its toll, the Commerce Department reported Friday. Gross domestic product (GDP)-a measure of total economic activity within U.S. borders-grew at only a 1.6 percent annual rate during the third quarter; it was the slowest pace of growth since the first quarter of 2003 saw 1.2 percent expansion, the department said. Wall Street analysts had predicted a 2.2 percent rate of growth, and the disappointing numbers quickly knocked the major U.S. stock markets in early morning trading. At the same time, the slowing economy increased the chances of interest rate cuts early next year, which in the long run should help boost the stock markets. Despite weakening housing prices, business investment remained healthy and consumers picked up their spending pace, leading analysts to believe the fourth quarter GDP figures should be healthy. Business spending, or nonresidential investment, rose at an 8.6 percent annual rate in the third quarter, close to double the second quarter's 4.4 percent. Consumer spending, which accounts for roughly two-thirds of national economic activity, increased at a 3.1 percent rate, up from 2.6 percent in the second quarter.
