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To: long-gone who wrote (66694)	3/29/2001 10:46:47 AM
From: Rarebird	Respond to of 117044

GDP expands at slowest pace in 5 1/2 years Thursday, March 29, 2001 09:36 AM EST WASHINGTON, Mar 29, 2001 (United Press International via COMTEX) -- The Commerce Department said Thursday that the U.S. economy, as measured by the Gross Domestic Product, grew at its slowest pace in 5 1/2 years during the final quarter of last year. The government agency said the economy expanded at a 1.0 percent annual rate during the fourth quarter of 2000, down from the original estimate of 1.1 percent growth. The last time growth was slower than 1.1 percent was during the second half of 1995, when the economy expanded at a 0.8 percent pace. Gross domestic product, or the total output of goods and services produced in the United States, expanded 2.2 percent in the third quarter and a robust 5.6 percent annual rate in the second quarter of 2000. Many economists on Wall Street were expecting the fourth quarter GDP to expand by 1.1 percent. Analysts said growth was restrained by slower consumer spending and a drop in business spending on software and equipment. Last week after cutting interest rates by a half percentage point, Federal Reserve policy makers said that further economic weakness is a greater threat to the record economic expansion than accelerating inflation. Fed Chairman Alan Greenspan and other central bankers have lowered interest rates three times so far this year to revive the economy. For all of 2000, the economy expanded 5.0 percent, the strongest since 7.3 percent in 1984. That followed growth of 4.2 percent in 1999 and 4.4 percent in both 1998 and 1997. The latest report from the Commerce Department also showed the economic slowdown also hit company balance sheets as after-tax profits shrank for the first time in two years, down 4.3 percent to an annual rate of $626.4 billion after growing 0.6 percent in the third quarter. It was the first time since the fourth quarter of 1998, when profits decreased 1.6 percent, that businesses reported smaller earnings than in the prior quarter. After-tax profits totaled $626.4 billion at an annual rate in the fourth quarter, down from $654.4 billion in the third quarter and the lowest since the fourth quarter of 1999. Consumer spending, which accounts for two-thirds of gross domestic product, grew at a 2.8 percent annual rate in the fourth quarter. In the third quarter, consumer spending increased at a 4.5 percent rate. Spending on durable goods, such as autos, home appliances and other big-ticket items, fell at a 3.1 percent annual rate, compared with a 7.6 percent rate in the third quarter. Spending on non-durable goods rose at a 1 percent pace, down from the 4.7 percent pace in the prior three months. Real final sales, which exclude inventories, rose at a 1.7 percent annual rate. Non-residential fixed investment, which includes commercial construction, business equipment and software, fell at a 0.1 percent rate after rising 7.7 percent in the third quarter. The report showed that inflation was about the same as previously thought for the fourth quarter. The GDP deflator, a broad measure of inflation tied to the report, rose at a 2 percent annual pace, previously reported as rising at a 1.9 percent pace. That compares with a 1.6 percent rate of increase in the third quarter. The personal consumption expenditures price index, a measure of inflation watched by Fed policy makers and tied to consumer spending, rose at a 1.9 percent pace, the same as previously reported. In the third quarter, the index rose at a 1.8 percent rate. Copyright 2001 by United Press International. News provided by COMTEX comtexnews.com