U.S. third quarter economic expansion was revised upward on Tuesday due to brisker personal consumption and firm inventories, but the U.S. central bank predicted that the world's largest economy still had to grapple with a slackening economic growth pace in the coming years.

FASTER 3Q GROWTH THAN FIRST THOUGHT

U.S. economy's growth pace was revised upward to an annual rate of 2.5 percent in the third quarter of this year, compared with the initially estimated pace of 2 percent, due to rising consumer spending, firms inventories, stronger exports and government outlays, figures from the U.S. Department of Commerce showed on Tuesday.

"The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, nonresidential fixed investment, exports and federal government spending that were partly offset by a negative contribution from residential fixed investment," the Commerce Department said.

More upbeat personal consumption helped boost the economic growth pace in the third quarter, as U.S. consumers spend more in the summer on automobiles, computers and other items. Personal consumption accounted for about 70 percent of the total activity of the U.S. economy.

However, economists believed that although the nation might continue seeing shopping sprees during the traditional festivals including Thanksgiving and Christmas in the fourth quarter, the U. S. inventories and consumption were not likely to post surges in the beginning of next year, as the nation was still facing challenges including a high unemployment rate and slow paycheck growth pace.

DISAPPOINTING LABOR MARKET

The U.S. unemployment rate remained at 9.6 percent in October, and the U.S. Federal Reserve said on Tuesday that progress in reducing unemployment had been "disappointingly slow."

The central bank also revised its prediction of the U.S. unemployment rate to the range between 8.9 percent and 9.1 percent in 2011, up from the June forecast range between 8.3 percent and 8. 7 percent.

The Washington-based International Monetary Fund (IMF) predicted last month that the jobless rate would linger at 9.6 percent in the United States for next year.

Although the U.S. economic growth pace was revised upward in the third quarter, experts held that the growth was not robust enough to bring down the stubbornly high unemployment rate, which might further cut into U.S. citizens' consumption willingness.

SLACKENING HOUSING MARKET

The U.S. central bank noted on Tuesday that several factors would continue to restrain the U.S. economic growth, including a high degree of caution exhibited by consumers and businesses, persistent weakness in the residential and commercial real estate sectors, and still tight credit conditions. It added that the U.S. housing market has remained "exceptionally weak."

The Fed said despite further declines in mortgage interest rates in recent months, other factors continued to restrain housing demand, including consumer pessimism about the outlook for jobs and income, the depressed rate of household formation, and tight underwriting standards for mortgages.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low of 4.23 percent in October from 4.35 percent in September, while the rate was 4.95 percent in October 2009.

Existing-home sales declined 2.2 percent to a seasonally adjusted annual rate of 4.43 million units in October from 4.53 million units in September, and were 25.9 percent below the 5.98- million-unit level in October 2009, the National Association of Realtors (NAR) said on Tuesday.

Analysts said that the U.S. pace of property construction was even lower compared with the depressed level of the preceding year, due to the backlog of unsold existing homes, more stringent lending conditions, and still grim home foreclosure situation.

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