U.S. economic growth revised up
GDP expanded at 4.1% rate in 4th quarter
The Associated Press
Updated: 8:43 a.m. ET Feb. 27, 2004
WASHINGTON - America’s economy, bolstered by brisk business spending, grew at a healthy 4.1 percent annual rate in the final quarter of 2003. That was even faster than first thought and offered new evidence that the nation’s economic recovery was firmly rooted going into the new year.
The latest reading on the gross domestic product — the broadest measure of the economy’s health — was slightly better than the 4 percent pace estimated a month ago for the October-to-December quarter, the Commerce Department reported Friday. GDP measures the value of all goods and services produced within the United States.
Even though the fourth quarter’s growth rate marked a slowdown from the red-hot 8.2 percent pace of the third quarter — the best in nearly two decades — it nonetheless represented a solid performance.
The 4.1 percent pace was better than economists were predicting. They were forecasting growth rate of around 3.8 percent.
Looking ahead, the economic picture seems promising, analysts say. Economic growth in the current January-to-March quarter is expected to clock in at a rate of around 4.5 percent or higher, according to some analysts’ projections.
For out of work Americans, though, these are still frustrating times even as the economy is in recovery mode. Job growth has been painfully slow. The economy has lost 2.2 million jobs since President Bush took office in January 2001, a sore spot as he seeks re-election. Democratic presidential contenders have seized on this to make the argument that his economic policies are not working.
Federal Reserve Chairman Alan Greenspan and other economists, however, are hopeful that companies will step up hiring in the coming months.
In an especially encouraging sign that companies are feeling more confident in the staying power of the recovery, they boosted investment in equipment and software in the fourth quarter at a sizable 15.1 percent annual rate. That was stronger than the 10 percent rate first estimated and was a main factor in GDP being revised upward for the fourth quarter.
GUIDE Key economic indicators
Click an indicator name to learn more
Period Latest Prev.
• Consumer Confidence Feb.* 87.3 96.4
• Retail sales Dec.* 0.5% 1.2%
• GDP Q4* 4.0% 8.2%
• ISM Index Jan.* 63.6 63.4
• Factory Orders Dec.* 1.1% -0.9%
• Unemployment Rate Jan. 5.6% 5.7%
• Employment situation Jan.* 112,000 16,000
• Consumer inflation Jan. 1.1% 1.1%
• Housing starts Dec.* 2,088,000 2,054,000
• Home sales Jan.* 7,146,000 7,495,000
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CONSUMER CONFIDENCE
Recent figures
Feb.* 87.3
Jan. 96.4
Dec. 91.7
Nov. 92.5
Oct. 81.7
Sept. 77.0
Aug. 81.7
July 77.0
June 83.5
May 83.6
April 81.0
March 61.4
What is it?
Consumer confidence is considered important because consumer spending accounts for more than two-thirds of U.S. economic activity. The monthly Conference Board survey is one of the two most closely watched indicators of sentiment. Based on a mail-in survey sent to about 5,000 households. Results are converted to an index and expressed in comparison to the 1985 average of 100.
Source: The Conference Board
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RETAIL SALES
Recent figures
Dec.* 0.5%
Nov. 1.2%
Oct. 0.0%
Sept. -0.3%
Aug. 1.0%
July 1.4%
June 0.9%
May 0.5%
April -0.3%
March 2.3%
Feb. -1.4%
Jan. 03 0.4%
What is it?
A broad measure of consumer spending trends. Includes sales of motor vehicles, clothing, food at both grocery stores and restaurants, electronics, building materials drugs and other items. Expressed as a percent change from previous month, adjusted for seasonal variations but not price changes.
Source: Census Bureau
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GDP
Recent figures
Q4* 4.0%
Q3 8.2%
Q2 3.3%
Q1 2003 1.4%
Q4 1.4%
Q3 4.0%
Q2 1.3%
Q1 2002 5.0%
Q4 2.7%
Q3 -0.3%
Q2 -1.6%
Q1 2001 -0.6%
What is it?
The gross domestic product is the broadest measure of the economy, comprising the value of all goods and services produced in the United States. It is reported quarterly with frequent revisions. Generally expressed as a percentage change from the previous quarter in "real" or inflation-adjusted terms. Economists presume real GDP is capable of growing at an annual rate of about 3.5 percent over the long term. When GDP declines over a sustained period of time the economy is considered to be in recession.
Source: Bureau of Economic Analysis.
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ISM INDEX
Recent figures
Jan.* 63.6
Dec. 63.4
Nov. 62.8
Oct. 57.0
Sept. 53.7
Aug. 54.7
July 51.8
June 49.8
May 49.4
April 45.4
March 46.2
Feb. 50.5
What is it?
The first major indicator reported each month, considered a reliable assessment of how the manufacturing sector is performing. Based on a survey of executives done by the Institute for Supply Management, formerly known as the National Association of Purchasing Management. Responses are compiled and reported as an index number. A reading above 50 percent indicates the manufacturing sector is expanding, while a reading below 50 indicates it is shrinking.
Source: Institute for Supply Management
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FACTORY ORDERS
Recent figures
Dec.* 1.1%
Nov. -0.9%
Oct. 2.4%
Sept. 1.4%
Aug. -0.3%
July 2.0%
June 1.9%
May 0.3%
April -2.6%
March 1.5%
Feb. -0.5%
Jan. 03 1.6%
What is it?
Data on new orders for manufactured goods, adjusted for seasonal variation, offer a good indicator of the manufacturing sector's health, closely watched because it is the most volatile part of the economy. Expressed as percent change from previous month.
Source: Census Bureau.
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UNEMPLOYMENT RATE
Recent figures
Jan. 5.6%
Dec. 5.7%
Nov. 5.9%
Oct. 6.0%
Sept. 6.1%
Aug. 6.1%
July 6.2%
June 6.3%
May 6.1%
April 6.0%
March 5.8%
Feb. 5.9%
What is it?
One of the best known and most politically powerful economic indicators, the rate is calculated from a monthly survey among a sample of about 60,000 households. The rate is adjusted for seasonal variations, but unlike most economic statistics it is never revised.
Source: Bureau of Labor Statistics.
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EMPLOYMENT SITUATION
Recent figures
Jan.* 112,000
Dec. 16,000
Nov. 83,000
Oct. 88,000
Sept. 67,000
Aug. -25,000
July -45,000
June -14,000
May -28,000
April -20,000
March -110,000
Feb. -159,000
What is it?
Represents the month-to-month change in jobs on payrolls of the nation's business, government and non-profit establishments. Generally considered a more accurate indicator of labor market health than the unemployment rate. Analysts estimate the economy should add about 150,000 jobs monthly to keep up with the nation's growing work force. Based on a sample of 300,000 establishments employing nearly a third of the nation's workers, the figure is adjusted for seasonal variations and frequently revised.
Source: Bureau of Labor Statistics.
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CONSUMER INFLATION
Recent figures
Jan. 1.1%
Dec. 1.1%
Nov. 1.1%
Oct. 1.3%
Sept. 1.2%
Aug. 1.3%
July 1.5%
June 1.5%
May 1.6%
April 1.5%
March 1.7%
Feb. 1.7%
What is it?
The most widely known and used measure of inflation, the Consumer Price Index is based on the price of a "basket"of goods including food, beverages, fuel, medical care and clothing. Value refers to year-over-year change in "core" prices, excluding volatile food and energy categories.
Source: Bureau of Labor Statistics.
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HOUSING STARTS
(seasonally adjusted annual rate)
Recent figures
Dec.* 2,088,000
Nov. 2,054,000
Oct. 1,977,000
Sept. 1,931,000
Aug. 1,831,000
July 1,890,000
June 1,844,000
May 1,745,000
April 1,627,000
March 1,742,000
Feb. 1,640,000
Jan. 03 1,828,000
What is it?
A good indicator to assess demand for housing and construction industry health. Represents the number of new residential buildings, including single-family and multifamily homes, where construction was started. Expressed as a seasonally adjusted annual rate. Construction was started on 1.7 million new residential structures in 2002, the highest level since 1986.
Source: Census Bureau.
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HOME SALES
(seasonally adjusted annual rate)
Recent figures
Jan.* 7,146,000
Dec. 7,495,000
Nov. 7,241,000
Oct. 7,499,000
Sept. 7,809,000
Aug. 7,650,000
July 7,275,000
June 7,030,000
May 6,931,000
April 6,854,000
March 6,538,000
Feb. 6,795,000
What is it?
One of the bright spots of the economy in recent years, driven in part by historically low mortgage rates. Figure represents the sum of new and existing single-family home sales, expressed as a seasonally adjusted annual rate.
Sources: National Association of Realtors, Census Bureau
* preliminary figures • Print this
Another factor: Businesses were more aggressive than previously thought in adding to their stockpiles in the fourth quarter. Business inventory building added 0.92 percentage point to fourth-quarter GDP, even better than the 0.61 percentage-point increase estimated a month ago. That also was a sign that businesses were betting on stronger appetites for their goods.
A sustained turnaround in capital spending by business is a key ingredient for the economic recovery to be lasting. It was deep cuts to such spending that thrust the economy into a recession in 2001. The economy has struggled mightily to get back on firmer footing and finally in the second half of 2003 managed to cast off its lethargy.
The economy’s performance in the second half of last year marked the best back-to-back quarterly performance since the first two quarters of 1984.
Economists are heartened that businesses appear to be doing more to keep the economy going. Throughout economic hard times and during most of the recovery consumers have been doing the heavy lifting.
In the fourth quarter, consumers spent modestly and increased their spending at a 2.7 percent annual rate, slightly stronger than the 2.6 percent pace estimated a month ago. Still, that marked a slowdown from the third quarter as consumers spent lavishly — powered by extra cash from a home-mortgage refinancing frenzy and the president’s third round of tax cuts.
Analysts predicted the economy would slow in the fourth quarter compared to the third quarter’s scorching pace as the stimulative impact of refinancing and the tax cuts faded.
Consumers in fact trimmed spending on big-ticket goods, such as cars, at a 0.1 percent rate in the fourth quarter, the first decline since the second quarter of 2000.
Although economists believe consumers will keep their pocketbooks sufficiently open to help along the economy, they are still keeping a close eye on their behavior. Some economists worry that consumers might turn more cautious given the lackluster job market.
msnbc.msn.com
Oh. Feel free to have Lizzie come by and explain why GDP means nothing.
Oh, do you know what that funny underlined thingie above is? It's called a LINK. It used to prove you're not lying- -just making it up. Something you might take note of. |
