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To: Road Walker who wrote (114988)	10/27/2000 8:36:36 AM
From: Ibexx	Respond to of 186894

10/27 08:30 U.S. Economy Slowed to 2.7% Annual Rate of Growth in Third Qtr By Siobhan Hughes Washington, Oct. 27 (Bloomberg) -- The U.S. economy grew in the third quarter at the slowest pace in more than a year, restrained by a drop in government spending and slower growth in new home construction, the Commerce Department said today. Gross domestic product, the sum of all goods and services produced in the U.S., rose at a 2.7 percent annual rate in the three months ended Sept. 30. That followed a 5.6 percent second- quarter growth rate and was the slowest since output increased at a 2.5 percent pace in the second three months of last year. ``This takes us a long way toward a so-called soft landing, or sustainable economic growth without inflation,'' said Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis, before the report. The GDP deflator, a broad measure of inflation tied to the report, rose at a 2 percent annual pace, compared with a 2.4 percent rate in the second quarter. Analysts surveyed by Bloomberg News had expected growth at a 3.6 percent annual rate for the third quarter. The slowdown in the economy is welcome news for Federal Reserve policy-makers. Fed policy-makers ``will be comforted by the fact the economy is moving in the right direction and that is toward slower growth,'' said Mike Moran, chief economist at Daiwa Securities America Inc. in New York, before the report. Central bankers raised interest rates six times between June 1999 and May of this year to cool demand and keep inflation from accelerating. One reason for slower growth is a sluggish stock market. The Dow Jones Industrial Average is down almost 10 percent this year, while the Nasdaq Composite Index has fallen almost 20 percent. ``Our forecast is for the U.S. economy to grow at lower, more sustainable rates over the next year and a half,'' said San Francisco Fed President Robert Parry after a speech in Los Angeles last week. ``One of the reasons I think that occurs is that we do have the equity markets not rising over that period.'' New Home Construction Today's report showed investment in new home construction declined at a 9.2 percent annual rate in the third quarter after a 1.3 percent rate of increase in the second quarter. The decrease was the largest since a 15.6 percent drop at an annual rate in the second quarter 1995. Government spending fell at a 3.6 percent pace in the third quarter compared with a 4.8 percent rate of increase in the second quarter. The drop in the pace of government spending was the largest since a 4.8 percent decline in the fourth quarter 1995. Consumer spending, which accounts for two-thirds of gross domestic product, grew at a 4.5 percent annual rate, compared with a 3.1 percent pace in the third quarter. The pace of consumer spending was still less than the first quarter's 7.6 percent annual rate of increase, which was the fastest in 17 years. Few Inflation Signs The pick-up in spending occurred without triggering higher inflation. The personal consumption expenditures index, a measure of inflation watched by Fed policy-makers and tied to spending, rose at a 2.2 percent annual pace, close to the 2.1 percent rate in the second quarter. Businesses kept investing in productivity-enhancing equipment, though at a slower pace. Non-residential investment, which includes commercial construction and business equipment and software, rose at a 6.9 percent annual rate in the third quarter, compared with a 14.6 percent rate in the second quarter. Business investment in equipment and software increased at an 8.5 percent pace in the third quarter, compared with a 17.9 percent second-quarter rise. Business inventories rose $79.9 billion at an annual rate in the third quarter, up from a $78.6 billion annual pace of increase in the second quarter. Inventories added 0.08 percentage point to third-quarter growth after adding 1.73 percentage point in the prior three months. Real final sales -- which exclude inventories -- grew at a 2.7 percent annual rate in the third quarter, compared with a 3.9 percent annual growth rate in the second three months of the year. Exports rose at a 16.2 percent rate in the third quarter compared with a 14.3 percent rate of growth in the second. Imports rose at a 13.8 percent rate following an 18.6 percent second-quarter increase. Adjusted for inflation, GDP totaled $9.38 trillion in the third quarter when measured at an annual rate. That compares with $9.32 trillion in the second quarter. _______ A rate cut is in order? Ibexx

To: Road Walker who wrote (114988)	10/27/2000 10:21:57 AM
From: Tony Viola	Read Replies (1) \| Respond to of 186894

John, Barrett also repeated earlier comments that pairing its now-abandoned Timna processor with fast but pricey memory chips using technology from Rambus (NasdaqNM:RMBS - news) was a mistake. Using Rambus was more than just a Timna mistake. Tony