Economy Grew 1.4% in 4th Quarter As Consumer Spending Held Up
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WASHINGTON -- The U.S. economy grew more than first estimated during the fourth quarter as record car sales boosted consumer spending.
Gross domestic product, a measure of all goods and services produced in the U.S., rose at a revised 1.4% annual rate during the quarter after previously being estimated as a 0.2% rise, the Commerce Department said Thursday.
A separate report showed the number of U.S. workers filing first-time applications for unemployment benefits rose last week, but other Labor Department data released Thursday indicated the jobs market is continuing to improve.
The economy's fourth-quarter performance follows a 1.3% drop in GDP during the third quarter, which has been the only negative quarter of economic growth since the nation's last recession in 1991.
The U.S. has been in a recession since last March, but Federal Reserve Chairman Alan Greenspan said Wednesday he believes an economic recovery "is just getting under way." But he said the recovery will likely be moderate. The Fed is predicting the U.S. economy will grow between 2.5% and 3% this year.
For all of 2001 the economy grew at a 1.2% rate, the worst yearly performance since a 0.5% decline recorded in 1991.
The fourth quarter's rise was stronger than expected. A Thomson Financial survey of economists forecast the economy would grow at a 0.9% pace.
The Commerce Department said the increase was mainly because of upward revisions to consumer and government spending and a downward revision to imports. As has been the case for several quarters, consumer spending continued to offset declines in spending by businesses during the fourth quarter.
Consumer spending, as measured by personal-consumption expenditures, rose at a revised 6.0% pace, up from the 5.4% pace previously estimated and up from the 1.0% pace set in the third quarter.
The Commerce Department said record car sales was largely responsible for the step-up in consumer spending and was the main driver behind the 39.2% gain in durable-goods spending for the quarter.
Labor Market Stabilizes
Initial jobless claims rose by 17,000 to 378,000 in the week that ended Feb. 23, the Labor Department said Thursday. But the department trimmed its estimate of claims for the previous week, saying it received only 361,000 claims -- 22,000 fewer than it initially reported. The four-week moving average fell, as a result, by 3,000 to a six-month low of 373,250.
The latest numbers confirmed the view of most economists that the U.S. economy is beginning to recover from a brief recession.
Mr. Greenspan, however, has warned that the recovery won't result in a quick reduction in the unemployment rate. On Wednesday, he said the unemployment rate may rise as high as 6.25% this year, up from 5.6% last month.
The Labor Department said the total number of people drawing unemployment benefits rose in the week of Feb. 16, the latest week for which that number is available. Continuing claims increased by 66,000 to 3,492,000 after falling by 32,000 the previous week. The unemployment rate for workers with unemployment insurance, however, held steady at 2.7%.
The Labor Department's report showed that 45 states and territories reported an decrease in initial claims during the week of Feb. 16, while eight states reported an increase. No state, however, reported an increase of more than 1,000 claims.
Updated February 28, 2002 9:12 a.m. EST |
