The U.S. economy grew at a 1.7 percent annual rate in the third quarter, a bit less than previously thought, the government reported Wednesday. And Federal Reserve Chairman Alan Greenspan said there had been a "meaningful downturn" in economic output.
The Commerce Department said its downward revision in the gross national product showed the economy advanced even more slowly from July through September than the 1.8 percent first reported last month.The GNP is the total U.S. output of goods and services and its broadest measure of economic activity.
Greenspan, who has been cautious in describing the economy, told Congress the oil shock resulting from the Iraqi occupation of Kuwait and a credit shortage have brought about further weakness.
"All indications are that a meaningful downturn in aggregate output occurred as we moved into November," Greenspan told the House Banking Committee.
The central bank chief said oil prices, which have risen from $20 a barrel before the Iraqi invasion of Kuwait on Aug. 2 to $33 now, are cutting into the spending power of both businesses and consumers.
Greenspan also said the so-called credit crunch, which he first publicly noted in July, "has proceeded somewhat further."
Recent surveys of professional economic forecasters show that most believe the economy has tumbled into a recession - informally defined as two consecutive declines in the GNP. For many, the question is when it began.
Some analysts contend most of the third-quarter growth was concentrated in the first part of the period and was tapering off at the end after Iraq stormed Kuwait on Aug. 2 and the subsequent oil-price shock.
Even President Bush and his chief economic adviser, Michael Boskin, have said publicly the economy has weakened in recent months. Bush calls it a "slowdown"; Boskin says it is a "lull."