How "strong" is the economy? Uh, not as strong as they first claimed

Growth revised lower, inflation higher

By Rex Nutting, MarketWatch
Last Update: 8:47 AM ET July 29, 2005

WASHINGTON (MarketWatch) - The U.S. economy was weaker over the past three years than previously estimated, while inflation was moderately higher, the Commerce Department said Friday.

Instead of growing at a 3.1% annual rate from in the three years from 2002 through 2004, the economy actually grew at a 2.8% pace, the government said.

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At the same time, inflation was a bit hotter than previously thought, especially in 2004. The closely followed core personal consumption expenditure price index rose at a 1.7% annual pace in the three years, rather than the 1.4% earlier estimated.

In 2004, the core PCE price index was revised from1.5% to 2%, at the top of the Federal Reserve's 1.5%-2% comfort zone for inflation.