The U.S. economy is growing modestly, but consumers are reluctant to spend enough to create stronger growth, according to two reports Tuesday. Gross domestic product (GDP) grew at a 2.8 percent annual rate in the third quarter, less than originally estimated. And forecasts for the current quarter are for similarly slight growth before a possible decline next year. The Commerce Department's new reading on GDP was weaker than the 3.5 percent growth rate for the July-September quarter posted a month ago. The GDP rate was slightly weaker than analysts had expected. Meanwhile, U.S. consumer confidence remains weak following the worst recession in 70 years. The Conference Board, a private research organization, said its confidence index actually rose to 49.5 in November from a reading of 48.7 the previous month. While better than expected, the report shows that consumers remain pessimistic ahead of the holiday season. A reading above 90 indicates solid economic growth. The good news is that the economy finally started to grow again after a record four consecutive losing quarters. The bad news is that the rebound, now and in the coming months, probably will be weak. Growth is not expected to be strong enough to quickly lower the unemployment rate, currently at 10.2 percent. Economists believe it could climb as high as 11 percent by mid-2010 before slowly declining, and some say it could take at least four years for the unemployment rate to fall back to normal levels. For the current quarter, many economists think GDP will slow to about 2.5 percent growth, although others say it could reach 3 percent if holiday sales are better than expected. Most economists forecast that the economy will weaken again next year, with growth at an annual rate of about 1 percent as the impact of the $787 billion stimulus package fades and consumer spending remains weak amid high unemployment and tight credit.
