Commerce downgrades GDP third-quarter growth to 2 percent

The slower economic growth represents more bad news for President Obama, who faces tough headwinds in 2012. 

The economy grew by 2 percent in the third quarter of 2011, the Department of Commerce said Tuesday in a report that downgraded its previous estimate of 2.5 percent growth. 

This is still faster growth that the 1.3 percent jump in GDP recorded in the second quarter, but the half-percentage-point drop from the earlier estimate is likely to worry those who had seen signs of a stronger economic turnaround. 

It's also bad news from President Obama, who already faces nine percent unemployment and a troubled economy that threatens to turn him into a one-term president. 

Obama is pushing Congress to extend and deepen a payroll tax credit to employees. If Congress does not extend the tax credit, some economists have estimated it could shave as much as a point of GDP growth in 2012. 

The revision was due in part to lower private industry investment and lower consumer spending than estimated. Consumer spending grew at only 2.3 percent in the third quarter.

An economist with the National Association of Manufacturers said the new figures suggest the U.S. economy has grown only 1.5 percent in the last year.

"I have forecast that the economy will grow by at least one percentage point more than that in 2012, and yet it is clear that the economic recovery has been subpar. These rates of growth will not be enough to generate sufficient net new employment," said Chad Moutray, the chief economist of the National Association of Manufacturers.

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