By JEANNINE AVERSA
Associated Press
WASHINGTON -- The unfolding economic recovery will probably lose some momentum in the final three months of the year as rising unemployment and still hard-to-get credit weigh on consumers.
The economy will grow at a pace of around 2.5 percent in the just-started October-December quarter, according to projections made by analysts at Wells Fargo, IHS Global Insight and Moody's Economy.com. If accurate, that would mark a slowing from the projected growth of at least 3 percent that many economists think occurred in the just-ended third quarter.
The economy shrank at a rate of 0.7 percent in the April-June period, the Commerce Department said Wednesday.
"It's a recovery, but it is not a rapid recovery," said Nigel Gault, chief U.S. economist at IHS Global Insight.
The third quarter's performance is expected to mark a turning point for the economy, providing the strongest signal yet that the worst recession since the 1930s is over.
Many economists say consumers likely came back to life in the third quarter, boosting spending at around a 2 percent pace. If they are right, it would be the strongest showing since the first quarter of 2007, before the recession started.
But consumer spending, which supplies about 70 percent of economic activity, could turn out to be flat or post an increase of no more than 1 percent in the fourth quarter, according to economists' projections. People will be wary of splurging, given shrinking wages and rising unemployment.
