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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (4218)	9/28/2000 11:59:10 AM
From: T L Comiskey	Respond to of 65232

W A S H I N G T O N, Sept. 28 — The U.S. economy roared ahead in the spring, growing at a 5.6 percent annual rate, stronger than the government previously thought. Solid investment by American businesses offset less brisk spending by consumers. The Commerce Department reported today that in the April-June quarter the increase in the gross domestic product surpassed growth in the first quarter, when the economy expanded at a 4.8 percent annual rate. GDP is the nation’s total output of goods and services and the broadest measure of economic health. The government’s final reading on GDP — based on more data than its previous calculations — showed the economy growing more quickly than the 5.3 percent rate it estimated one month ago and the 5.2 percent rate initially calculated. The 5.6 percent rate marked the best showing since the fourth quarter of last year. Figure Stronger than Expected The second-quarter performance also was stronger than many analysts expected. They anticipated that growth would hold steady at 5.3 percent. In the current quarter, many analysts believe the economy has slowed to a growth rate in the 3 percent range. Even with the robust growth in the second quarter, inflation pressures actually moderated. An inflation gauge tied to the GDP, and closely watched by Fed Chairman Alan Greenspan, rose at a revised annual rate of 2.1 percent in the second quarter, better than the previous estimate and down from a 3.5 percent rate in the first quarter. The Federal Reserve has raised interest rates six times over the last 15 months to slow the economy and keep inflation under control. Many economists believe the Fed will leave interest rates unchanged at its meeting next week, given more recent signs of moderating economic growth. Breaking Down the Report Today’s report also said that after-tax profits of U.S. corporations grew by 2.5 percent in the second quarter, down from 5.7 percent in the first quarter. Consumer spending, which accounts for two-thirds of all economic activity, also slowed in the second quarter, rising at a 3.1 percent rate. While that was slightly stronger than previously estimated, it was the slowest pace since the second quarter of 1997. In the first quarter, it surged at a 7.6 percent rate, a 17-year high. While consumer spending cooled, that was offset by strong business investment, including spending on computers and other equipment, which rose at an unrevised annual rate of 14.6 percent in the second quarter. That compared with a 21 percent rate posted in the first quarter. Businesses also increased their spending on inventories, adding to second-quarter growth. The Government’s Contribution Also contributing to second-quarter growth was increased spending by the federal government, which rose at a whopping annual rate of 17.2 percent, more brisk than previously estimated. That compared with a 14.2 percent rate of decrease in the first quarter. The U.S. trade deficit, however, continued to be a drag on growth. The bloated deficit subtracted 1 percentage point from growth in the second quarter, compared to a reduction of 0.9 percentage points in the first quarter. All the changes show the economy growing at an annual rate of $127.1 billion in the second quarter, pushing the country’s total output of goods and services to $9.3 trillion, after adjusting for inflation.