U.S. Q4 Gdp Growth Fastest In Over Two Years
By Glenn Somerville
WASHINGTON (Reuters) - Vigorous consumer spending and booming
business investment helped fuel the strongest surge in U.S.
growth in more than two years in the closing quarter of 1998, the
Commerce Department said Friday.
Gross domestic product, the broadest gauge of national economic
activity, shot ahead at a 5.6 percent annual rate in the
October-December quarter, a sharp acceleration from the third
quarter's 3.7 percent rate and the strongest pickup in activity
for any quarter since a 6.1 percent jump in the second quarter of
1996.
The fourth-quarter GDP performance handily outstripped Wall
Street economists' expectations for a 4.4 percent rate of growth
and pushed full-year 1998 GDP growth to 3.9 percent, matching
1997.
The jump in annual GDP was accompanied by the lowest inflation in
nearly 40 years. Commerce said its chained measure of prices rose
only by 1 percent last year, the smallest increase since an
identical 1 percent gain in 1959.
''GDP is strong (but) the inflation news was better than
expected,'' said John Williams, chief economist at Bankers'
Trust. ''If ever there has been a perfect economy, the United
States seems to be it.''
The back-to-back 3.9 percent annual advances in GDP for 1997 and
1998 were the strongest since 1984, when GDP grew 7 percent.
GDP measures all goods and services produced within U.S. borders.
Output benefited in the fourth quarter from a snapback in auto
making after a mid-summer strike at General Motors Corp. (NYSE:GM
- news) and from a surprisingly strong trade performance as
exports rebounded from a third-quarter slump.
Consumer spending, which fuels two-thirds of economic activity,
grew by a solid 4.4 percent in the fourth quarter after a 4.1
percent third-quarter increase.
Spending on costly durable goods like new cars and other
long-lasting items shot up by 21.4 percent in the closing quarter
last year, nearly ten times the 2.4 percent increase posted
during the third quarter.
Federal Reserve Chairman Alan Greenspan, testifying before
Congress Thursday, praised the U.S. economy's resilience in the
face of international problems in places like Asia and Latin
America that have sapped exports.
But he warned the United States was unlikely to remain ''an oasis
of prosperity'' if much of the rest of the global economy
remained depressed and was unable to buy U.S.-made goods.
The Fed's policy-setting Federal Open Market Committee meets next
Tuesday and Wednesday but is widely expected to keep interest
rates steady amid scant evidence of economic slowing.
Three Fed rate cuts late last year helped bring U.S. stock
markets roaring out of a summer slump, adding to consumers'
ability to enjoy the benefits of strong job and wealth gains.
Still, most analysts foresee some moderation in the pace of GDP
expansion this year. It likely will stem from fading overseas
sales that is likely to sap demand for manufactured goods and
feed back into the economy in the form of reduced job
opportunities and greater caution about spending by consumers. |
