Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (31847)	10/27/2000 8:31:41 AM
From: UnBelievable	Respond to of 436258

been humorous or made you think I thought the market had bottomed?

To: Lucretius who wrote (31847)	10/27/2000 8:33:44 AM
From: UnBelievable	Read Replies (3) \| Respond to of 436258

: 3Q Sees Slower Growth; Uptick In Inflation =========================================================== Gross Domestic Product 3QAdv 2Q !Surprise: Yes ! Overall GDP: 2.7% 5.6% !Trend:Slower ! PCE Price Index: 2.2% 2.1% ! Growth ! !Survey: 3.5% ! =========================================================== By Jonathan Nicholson and Jennifer Corbett Dooren Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The U.S. economy cooled substantially in the third quarter, adding to hopes the Federal Reserve has managed to bring about an economic "soft landing." The Commerce Department said Friday economic growth increased at an 2.7% annual rate in the third quarter, down from the blistering 5.6% pace seen in the previous quarter and posting its slowest rate of growth since the second quarter of 1999. Inflation, as measured by the Fed-favored price index for consumer spending, crept upward, rising at an 2.2% pace from the second quarter's 2.1% rate. Investors may be unnerved by the news. After the unsustainable pace of growth in the second quarter, some slowing had been anticipated, led by a continued drag from the international trade sector and smaller inventory growth. But the pace of the slowing, assuming no major upward revisions in the data, was sharper than expected, possibly fanning concerns on Wall Street the economy is cooling too quickly. Analysts in a survey by Dow Jones and CNBC had expected Gross Domestic Product to advance at a greater 3.5% pace. Friday's advance report is the first of three estimates of Gross Domestic Product, and it is not uncommon for large revisions to be made between the preliminary and final estimates. The Federal Reserve will likely look favorably on the data. After a series of interest rate hikes starting in the summer of 1999, the Fed appears to have moderated the pace of growth from the average 5.2% rate in the first half of the year. The Fed's next policy meeting is set for Nov. 15, and policymakers are expected to leave interest rates steady. But the outlook for the future is unclear. The cumulative effect of the rate hikes, along with the constraining effect of higher energy prices and a jittery stock market, is seen reining in consumer spending in coming months. That prospect had led some analysts to conclude the Fed's next move would be to lower rates sometime next year. Friday's lower-than-expected GDP reading could renew such speculation. Slight Rebound In Consumer Spending Growth in the third quarter was marked by a modest rebound in the pace of consumer spending after a pause in the previous quarter. But a drop in government spending and residential housing offset some of that gain. Consumption spending, which accounts for two-thirds of economic activity, grew at a 4.5% annual rate, up from the 3.1% pace seen in the prior quarter. The gain was concentrated in the durable goods sector, which grew at an 7.5% annual rate, reversing a 5.0% decline in the second quarter. Non-durable spending was up at 4.9% rate while expenditures for services were up at a 3.7% pace. Overall real final sales grew at a 2.7% clip, a slowing from the 3.9% figure of the previous quarter. All that spending took a toll on consumers' pocketbooks, driving the saving rate - the percentage of income left over after spending - to an all-time low of minus 0.2% from the second quarter's 0.3%. Negative saving means consumers drew down savings, borrowed or liquidated assets to maintain their spending levels. Business investment also added to growth, but at a slower rate than previous quarters. The category rose at a 6.9% rate, down sharply from the 14.6% pace seen in the second quarter. Inventory levels, which made up a substantial portion of the second quarter's growth, were surprisingly robust in the quarter. Inventories grew at a $79.9 billion pace, defying expectations of a decline and adding slightly to growth. In the second quarter, inventories rose at a $78.6 billion pace. The biggest drag on growth in the third quarter came from the governmental sector. Spending by federal, state and local governments reversed the 4.8% advance seen in the previous quarter, falling at a 3.6% rate. The decline was led by a 10.1% drop in federal spending. Also subtracting from growth was residential housing, which decreased at a 9.2% rate, reflecting the housing market's cooling from the frenetic pace seen earlier this year, International trade picture remained a drag on growth as well, though a much smaller one than in recent quarters. Trade clipped 0.25-percentage points from the third quarter GDP. Export growth outpaced import growth for the first time since the fourth quarter of 1998, rising at a 16.2% pace compared with imports' 13.8% rate of growth. Inflation Measures Rise Modestly Inflation measures in the report rose but remained mostly tame. In addition to the 2.2% rise in the personal consumption expenditure price index, a separate measure of price pressures also rose modestly. Another price measure, the price index for gross domestic purchases, increased at a 2.4% pace in the third quarter, also a acceleration from the 2.1% rate seen in the second quarter. In its twice-yearly monetary report to Congress, the Fed said the PCE index was in some ways statistically superior to the CPI as a broad inflation gauge, even the CPI is by far the more widely watched measure. -Jonathan Nicholson and Jennifer Corbett Dooren, Dow Jones Newswires; 202-862-9255; Jonathan.Nicholson@dowjones.com (END) DOW JONES NEWS 10-27-00 08:31 AM