WASHINGTON - The economy is growing modestly, with consumers too wary about spending to invigorate the recovery.
That's the picture that emerged from reports Tuesday on the economy and the confidence of consumers, who power 70 percent of it.
Unemployment and tight credit have sapped shoppers' willingness and ability to spend freely as retailers enter their crucial holiday season. And Americans are expected to grow more cautious about spending next year. That would make for a plodding recovery.
The economy grew at a 2.8 percent rate last quarter. Forecasts for the current quarter are for similarly lackluster growth before a drop-off next year.
"It's hardly a rip-roaring recovery," said Stuart Hoffman, chief economist at PNC Financial Services. "Usually, coming out of a recession, you get growth more like a rodeo bull - at a pace of 6 or 7 percent in the early quarters of recovery. That isn't happening. It is coming out of the stalls more like a fat cow."
The Commerce Department's revised estimate of gross domestic product for July through September was less than the 3.5 percent growth rate foreseen just a month ago. And the estimate for GDP - the value of goods and services produced in the United States - was a tad less than the 2.9 percent growth rate that economists surveyed by Thomson Reuters had expected.
The main factors behind the downgrade: Consumers didn't spend as much. Commercial construction weakened. And imports exerted more of a drag on the economy. Businesses also trimmed more of their stockpiles, further restraining growth.
At the same time, the Conference Board's latest survey of consumer confidence found gloom among shoppers.
"I really won't be spending money on Christmas," said Ivan Horne, 47, of Tampa, Fla., who has been out of work for about a year. "I'm barely able to make enough to survive."
The GDP report showed the economy finally started to grow again from July through September, after a record four straight losing quarters. Yet growth probably won't be strong enough to quickly drive down the nation's unemployment rate, now at 10.2 percent.
For the current quarter, some analysts think economic growth will slow to around a 2.5 percent pace, but it could hit a pace of around 3 percent if holiday sales turn out better than expected.
Many economists say they think the economy will weaken again next year. Some project growth at a pace of around 1 percent as the benefits of the $787 billion stimulus package fade and consumers keep tightening.
"When the bills come in January, you'll see consumers pull back," said Brian Bethune, economist at IHS Global Insight. "It's going to be a slow-motion recovery."