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October 3, 2016 2:00 PM, EDT

Atlanta Fed Downgrades Third Quarter GDP View

Brent Lewin/Bloomberg News

NEW YORK — The U.S. economy is on track to grow at a 2.2% annualized rate in the third quarter, the Atlanta Federal Reserve's GDP Now forecast model showed Sept. 30, following data that showed a surprise drop in construction spending in August.

The latest third-quarter GDP estimate was lower than the 2.4% figure calculated on Sept. 30, the Atlanta Fed said on its website.

The government said Oct. 3 that construction spending fell 0.7% in August to a seasonally adjusted annual rate of $1.142 trillion, the lowest since December 2015. Economists polled by Reuters had forecast outlays to rise 0.2%.

In the wake of the latest construction spending data, Atlanta Fed's forecast on third-quarter real nonresidential structures investment growth fell from 8.4% to 4.7% and its forecast of third-quarter real government spending growth declined from 0.8% to 0.1%.

The Atlanta Fed has steadily lowered its outlook on U.S. gross domestic product in the third quarter following a string of disappointing readings in areas including trade.

The regional central bank's latest GDP forecast for the third quarter was markedly lower than its initial call of 3.6% on Aug. 3.