Fourth-quarter growth revised down to 2.8%
Consumer expenditures, lower local and state spending cited
WASHINGTON (MarketWatch) 
The U.S. economy grew at 2.8% pace in the final three months of 2010 — slower than the government initially projected — based on new data showing that consumers and state and local governments spent less than first estimated.
Last month, the Commerce Department said gross domestic product climbed at a 3.2% annual rate in the fourth quarter.
The revised report takes into account data not initially available in the first reading. Economists surveyed by MarketWatch had expected revised GDP to remain at 3.2%. 
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While consumer spending underpinned growth in the fourth quarter, the government now says spending rose 4.1%, down from a previously reported 4.4%.
That was still much faster than the 2.2% rate during the first three quarters of 2010, however. Consumer spending is the single largest contributor to the U.S. economy.
Spending by state and local governments, meanwhile, dropped 2.4% instead of the initial estimate of a 0.9% decline.
Many states have slashed spending to close multi-billion-dollar budget gaps. 
Spending by government at all levels fell 1.5% in the fourth quarter, down from 0.5% in the first reading of GDP. Federal spending was unchanged from previously reported levels, however. Somewhat higher imports, which subtract from growth, also contributed to the downward revision in fourth-quarter GDP.
Imports fell 12.4% instead of the initially reported 13.6% drop. For all of 2010, the economy expanded by 2.8%, the fastest pace of growth since 2007.
Yet the nation’s unemployment remains stuck at elevated levels — 9.0% in January — and the recovery has been one of the weakest in modern record. Economists say the U.S. will have to grow a lot faster to put millions of idle Americans back to work.
Most forecasters expect the U.S. to grow 3.2% or higher in 2011.
Most other data in the government’s latest GDP report were little changed.
Spending on durable goods, nondurable goods and services all rose, but at slightly lower levels than previously reported.
Final sales for domestic product, considered a better measure of domestic demand because it excludes inventories and trade, rose at 6.7% rate instead of 7.1% as initially calculated.
The key inflation indicator in the GDP report was barely changed from the first estimate. The personal consumption expenditure index remained at 1.8%, though the core index excluding food and energy was marked up to 0.5% from 0.4%

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