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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Ish who wrote (129711)	2/28/2001 2:50:44 PM
From: peter a. pedroli	Respond to of 769667

Wednesday February 28, 12:59 pm Eastern Time U.S. Cuts Economic Growth Estimate By Barbara Hagenbaugh WASHINGTON (Reuters) - The U.S. economy grew at a weaker pace than previously thought during the last three months of 2000, the government said on Wednesday in a report showing sluggish growth heading into the new year. Gross domestic product, which measures the value of all goods and services produced within U.S. borders, grew at a revised annual rate of 1.1 percent during the October-December quarter, the slowest pace in five and a half years, the Commerce Department said. The government initially had estimated that fourth quarter GDP rose 1.4 percent. The revised GDP figure was half of the 2.2 percent recorded in the third quarter, and was the slowest quarterly growth pace since a 0.8 percent gain in the second quarter of 1995, when the economy was coping with overstocked inventories. ``We are in a meaningful slowdown,'' said Robert Dederick, economic consultant to Northern Trust Co. in Chicago. The revision, however, was above estimates from analysts, who had predicted the Commerce Department would alter its GDP figure to a 1.0 percent gain in the fourth quarter. U.S. financial markets shrugged off the report, focusing instead on testimony from Federal Reserve Chairman Alan Greenspan. INVENTORY PILE-UP SLOWER Commerce said it cut its fourth quarter growth estimate to reflect the latest data for inventories, exports and imports. Business inventories rose at an annual rate of $59.5 billion in the fourth quarter, down from $72.5 billion in the third quarter and revised from a previously reported $67.1 billion, the department said. Analysts said the inventory revision suggested manufacturers were keeping up with slowing demand better than previously thought. ``What we saw was that the quarter saw a dramatic slowing in final sales but we did manage to slow the rate of inventory accumulation,'' Dederick said. ``I think some progress was made in correcting the inventory imbalances toward the end of the quarter.'' Exports fell a 6.1 percent annual rate in the fourth quarter, revised from a 4.3 percent decline. Imports fell 0.7 percent during the October-December period, down from a 0.5 percent gain reported last month. Consumer spending, which accounts for two-thirds of U.S. economic growth, rose at a 2.8 percent annual rate in the fourth quarter, revised from a previously reported 2.9 percent gain. The increase in spending was far below the third quarter, when consumption rose 4.5 percent. Spending has been hit by declining consumer confidence, which Greenspan and other U.S. central bankers have highlighted recently as an important factor for keeping the record-long U.S. economic expansion on track. The Conference Board, a business research group, said on Tuesday U.S. consumer confidence slumped in February to its lowest level in more than four and a half years. FOCUS ON THE FED CHIEF With the data for consumer confidence and GDP in hand, Greenspan gave his assessment of the U.S. economy before a House panel on Wednesday morning. The powerful Fed chief repeated his warning that the economic risks were still tilted toward weakness but disappointed markets when he said the Fed preferred to change rates at its regular meetings, dashing hopes the central bank would cut interest rates before its next meeting on March 20. Responding to weak economic news, the U.S. central bank cut rates twice by half a percentage point in January, bringing the federal funds rate down to 5.5 percent. The U.S. economy lost steam abruptly in the second half of 2000, after a robust first six months that helped give the country its strongest full-year growth in 16 years. GDP for all of 2000 rose 5 percent, up from a 4.2 percent gain in 1999. But the full-year performance was overshadowed by the steady loss of economic stamina as 2000 drew to a close. Some analysts believe the U.S. economy has lost even more steam thus far in the first quarter of 2001, and a few think it is actually contracting and may tip into recession. Greenspan on Wednesday repeated his belief that U.S. economic growth is currently ``effectively at zero.'' The National Association for Business Economics reported Monday that the median estimate from the 34 professional forecasters it surveyed was a 0.6 percent annual rate gain in GDP in the first quarter, followed by 1.9 percent in the second quarter and a further rebound in the second half. ``What's more important is what is going on in the first quarter of the year,'' said Kathleen Camilli, chief economist at Tucker Anthony, a New York-based brokerage firm. Camilli is forecasting a 0.5 percent decline in GDP in the first quarter and a recession in 2001. Recessions are commonly defined as two straight quarters of contraction in growth. The Commerce Department typically revises its quarterly GDP data for two months following its initial estimate. The final estimate for the fourth quarter is due March 29. A first look at first quarter 2001 GDP is due at the end of April