WASHINGTON (AP) - The U.S. economy grew more slowly over the past three years than the government had previously estimated, held back by more frugal consumers and steeper spending cuts by state and local governments.
WASHINGTON (AP) — The U.S. economy grew more slowly over the past three years than the government had previously estimated, held back by more frugal consumers and steeper spending cuts by state and local governments.
The economy expanded at just a 2 percent annual rate from 2012 through 2014, down from a previous estimate of 2.3 percent, the Commerce Department said Thursday. Nearly all the weaker-than-expected growth occurred in 2013, when the government now says the economy expanded just 1.5 percent, much less than its previous 2.2 percent estimate.
The changes result from Commerce's annual revisions to its growth data, which are based on updated data from the Census Bureau, IRS and other agencies.
The revisions show that the economy's already-modest growth since 2011 was even weaker than thought. The recovery since the Great Recession officially ended in June 2009 has been the slowest of any since World War II.
The modest expansion has raised concerns that the U.S. economy has entered a period of historically slow growth. The nation's workforce is growing at a weaker pace, and employees are less efficient than before the recession, government data show. Those trends could restrain future economic growth.
Last year's growth estimate was unchanged, at 2.4 percent, while 2012 was nicked to 2.2 percent from 2.3 percent.
Weaker consumer spending was the main factor behind the sharp downward adjustment to 2013's figure. Consumers spent just 1.7 percent more in 2013, the government said, down from its previous estimate of 2.4 percent.
Government spending, particularly by state and local governments, was also downgraded. It shrank 2.9 percent in 2013, a much steeper drop than the 2 percent contraction previously estimated.
This year, the government also revised its seasonal adjustment of the federal government's defense spending. Seasonal adjustment is the process economists use to filter out regular economic patterns, such as the layoff of temporary retail employees after the winter holidays, in order to measure more fundamental changes.
The changes were prompted by a recurring pattern in recent decades: The economy has regularly grown more slowly in the first quarter compared with the rest of the year, while expanding faster in the third quarter than in the second or fourth.
The revisions smooth out, though don't fully eliminate, that pattern. Average annual growth in the third quarter in the three years from 2012 to 2014 was marked down sharply, to 2.6 percent, from 4 percent. Average annual growth in the first quarter was upgraded to 1.2 percent from 1 percent.