Third Quarter GDP Revised Downward by 20 Percent

The U.S. economy grew more slowly over the summer than the government had earlier estimated because businesses cut back more sharply on restocking of shelves.

The Commerce Department says the economy grew at an annual rate of 2 percent in the July-September quarter, lower than an initial 2.5 percent estimate made last month. The government also said after-tax incomes fell by the largest amount in two years, reflecting the high unemployment and lower pay raises.

The downward revision was largely because of a lower estimate for inventory rebuilding.

Economists believe this could lead to stronger growth in the current quarter, if businesses foresee more demand.

Economists believe growth will strengthen modestly to around 3 percent in the fourth quarter. But that could be slowed by the weaker income growth.