<US economy>Economy expanded at fastest pace in more than 2 yrs in Q4.
Granola:
Speaking of shorts, check this out.Mind you the phenomenal growth in Q4 and fiscal 1998 in general did not trigger any substantial growth in inflation,actually inflation remained subdued,fantastic news if you ask me.
Also do note corporate profits are said to outpace in 1999 compared to 1998.
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Top Financial News
Wed, 31 Mar 1999, 9:41am EST
U.S. Economy Expanded at Fastest Pace in More Than 2 Years in 4th
Quarter
U.S. GDP Grew at Revised 6% Rate in 4th Qtr; Grew 3.9% in 1998
Washington, March 31 (Bloomberg) -- The U.S. economy grew in
the fourth quarter of 1998 at the fastest pace in more than two
years, punctuated by vigorous consumer spending and an improved
trade picture, revised Commerce Department figures showed.
Gross domestic product, the total output of goods and
services, expanded at a 6 percent annual rate in the final three
months of last year, revised from the government's previous
estimate of a 6.1 percent pace. A slower pace of inventory
building and business investment resulted in the revision.
Consumer spending was stronger than previously estimated.
''The driving forces behind growth were consumption and
investment, as the domestic economy remained strong even as the
global economy faltered,'' said Greg Jones, chief economist at
Briefing.com in Jackson, Wyoming, before the report.
Before the report, analysts expected that fourth-quarter GDP
expanded at a 6.1 percent rate. In the third quarter, GDP grew at
a 3.7 percent pace.
The fourth-quarter GDP increase helped catapult the economy
forward last year by 3.9 percent, matching 1997's robust pace and
unchanged from the earlier estimate. That allowed the current
expansion, which entered its ninth year this month, to set a
peacetime record. The only longer expansion, between 1961 and
1969, coincided with the Vietnam War buildup.
At the same time, inflation was dormant. The GDP price
deflator, a measure of price increases followed by many
investors, rose at a 0.8 percent pace in the fourth quarter,
previously reported as an increase of 0.7 percent. That matched a
0.8 percent annualized increase for first quarter of last year
and followed a 1 percent rate in the third quarter. For all last
year, the deflator rose 1.0 percent, the slowest since 1949.
Inflation Low
''So far, this expansion has been characterized by non-
inflationary growth rather than the overheating that has been the
death-knell of so many past expansions,'' Federal Reserve Bank of
Philadelphia President Edward Boehne, a voting member of the
Fed's interest rate-setting Open Market Committee, in a speech
last week in Puerto Rico.
Low inflation allowed the FOMC to hold the line on interest
rates at yesterday's policy meeting. The Fed kept its target
interest rate on overnight loans between banks steady at 4.75
percent, where it's been since November.
While the economy was sailing smoothly into 1999, businesses
had trouble earning a profit. Fourth-quarter after-tax corporate
profits, reported for the first time in today's report, fell
1 percent after declining 1 percent in the third quarter. After-
tax profits 3 percent in the fourth quarter compared with the
fourth quarter of 1997.
''Corporate profits were poor in the fourth quarter and the
stock market declined between July and October in anticipation of
bad profits,'' said Hugh Johnson, chief investment adviser with
First Albany Corp. in Albany, New York.
Decline in Profits
For all of last year, corporate after-tax profits declined
2.2 percent, the first decrease since a 4.8 percent drop in 1989,
a Commerce Department spokesman said. That compares with a 7.5
percent increase in 1997 profits, the best showing since a 21.9
percent gain in 1995.
Still, ''that's all behind us. The market started to rise in
early October in anticipation profits will recover. The verdict
now is for good profits and that will unfold over next three
quarters,'' Johnson said. ..............
bloomberg.com |
