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2nd-Quarter Economic Growth Revised Upward

GDP grew at a 3.3% rate. A separate report says consumer sentiment drops in September.

September 27, 2003|Jesus Sanchez | Times Staff Writer

The U.S. economy grew at a faster pace than previously estimated during the second quarter, with expenditures by consumers and government driving much of the increase, a government report said Friday.

However, consumer sentiment in September was weaker than previously reported, dropping for the second month in a row, according to a widely watched survey by the University of Michigan.

The mixed economic reports did not have much of an effect on Wall Street investors, who were busy taking profits much of the day. The Dow Jones industrial average ended the day at 9,313.08, down 30.88 points. Nasdaq fell 25.17 points to 1,792.07, while the S&P 500 slipped 6.42 points to 996.85

In its final report on the U.S. economy during the second quarter, the Commerce Department said the nation's gross domestic product -- a measure of the value of all goods and services -- grew at a 3.3% annual rate, revised upward from the previous estimate of 3.1%.

The second-quarter growth rate was much higher than the 1.4% reported during the previous two quarters as the economy shifted into higher gear. Two of the largest sources of strength during the April-to-June period were consumer spending, up 3.8%, and government expenditures, up 8.5%.

Many economists had expected an upward revision of the second-quarter figures because there have been increasing signs of a pickup in economic activity. Growth is expected to heat up in the latter half of this year, with the GDP forecast to expand by more than 4%, economists said.

In the University of Michigan report, its index of consumer sentiment for September came in at 87.7, down from a preliminary 88.2, according to people who had seen the survey.

The index declined for the second month in a row as the nation's rising unemployment rate had consumers worried despite improvements in other sectors of the economy.

Consumer attitudes are expected to brighten in the coming months, however, as people benefit from the rebound in stock markets and an anticipated acceleration in economic growth, economists said.

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