AMERICA’S Federal Reserve upped its forecast for economic growth next year to a range of 2.5 per cent to 3.5 per cent as official statistics revealed the world’s biggest economy grew by less than originally thought in the third quarter. <br /><br />The US economy grew by 2.8 per cent between July and September, well below the initial 3.5 per cent estimate, according to official figures released yesterday. <br /><br />The Commerce Department confirmed that the US did in fact exit recession in the third quarter after four straight quarters of contraction, but admitted that its original reading last month had been too optimistic. <br /><br />Household spending rose 2.9 per cent in the three-month period, down from an earlier estimate of 3.4 per cent, although this was due in large part to the government’s “cash for clunkers” car scrappage scheme that has since ended. <br /><br />Paul Dales, US economist at Capital Economics, pointed out that the American economy had only grown thanks to a massive helping hand in the form of government stimulus packages. <br /><br />“The boost from the fiscal stimulus and inventories will fade next year and we fear that GDP growth will slow sharply again in the second half of 2010,” he added. <br /><br />Meanwhile, home prices are continuing to stabilise in the US, according to the latest readings from the S&P/Case-Shiller Home Price Index.<br /><br />In September, home prices increased 0.3 per cent to a seasonally adjusted reading of 144.96, while prices were up month-on-month in 11 urban areas, including San Francisco and Washington DC.<br /><br />Patrick Newport, US economist at IHS Global Insight, said: “We believe that prices have further to fall – about another five per cent – because the foreclosure rate, which hit a record high at the end of the third quarter, and the unemployment rate are still rising.”<br /><br />Consumer confidence also edged up this month, according to the Conference Board, which said its confidence index rose to 49.5 from a revised 48.7 in October.