US GDP Growth Confirms the Expected


The US economy slowed significantly in the last quarter of 2002, with consumption slowing and the job market weak according to data released this weak by the US Commerce Department. I guess we already knew all of this, but still it's nice to see our 'best guesses' confirmed.

U.S. gross domestic product rose at an annual rate of 1.4 percent in the final three months of last year after rising a robust 4 percent in the third quarter, the Commerce Department said in its final snapshot of fourth-quarter growth. For the year as a whole the economy grew a modest 2.4 percent, not enough to generate new jobs but a good bit better than the 0.3 percent gain in recession-bound 2001. The weak fourth-quarter reading on GDP which measures the value of all goods and services produced within U.S. borders -- was unchanged from a preliminary report released a month ago. Wall Street dismissed it as old news, with traders there fixated on the course of the war in Iraq. A separate report on claims for jobless benefits suggested businesses were reluctant to hire new workers with war clouding the outlook, although it hinted at some easing of labor-market strains and was not as bleak as most economists had expected. In addition, employment weakness pushed an index of national economic activity into negative territory in February and help-wanted ads in major U.S. newspaper inched lower, according to two other reports. "We sort of stand on the edge of recession," Goldman Sachs economist Jan Hatzius said, adding that the economy could tip into a slump quickly if hit by a shock. Hatzius said, however, that a sharp decline in oil prices as the United States launched military action against Iraq lessened chances of a renewed downturn. Consumer spending rose at a 1.7 percent pace in the final three months of last year, a sharp slowdown from the third quarter's 4.2 percent gain that reflected a big drop in auto sales, the Commerce Department said. In addition, exports plunged and imports rose, supplanting some domestic production. It said the widening trade gap shaved 1.59 percentage points from GDP growth.
Source: Yahoo News
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