Economic growth in the United States slowed dramatically during the fourth quarter of 2002, but it did manage to outperform levels from the year before.
The Commerce Department on Thursday said the gross domestic product increased at a 0.7% annual rate from October through December, far slower than the 4% pace recorded during the third quarter.
For all of 2002, this measure of the total output of goods and services in the U.S. increased 2.4%, far better than 0.3% increase for 2001, but down from the 3.8% pace recorded during 2000.
"This reduces the growth rate for the five quarters since the end of the recession to 2.7%, well short of the sustainable, non-inflationary growth rate of at least 3%-plus and perhaps near 4%," said Newport Communications Senior Economist Jim Haughey. "Growth needs to be sustained at 3.5% or more to begin to absorb the currently idle labor and equipment that is souring confidence and restraining investment."
He said the GDP grew at the same 2.7% rate in the first five quarters of the start of the last business expansion in 1991-92. However, Haughey said the sustainable growth rate for the U.S. economy has risen at least 0.5% in the last decade due to rapid labor productivity growth, so it feels worse this time because it is taking longer to reemploy laid off workers.
"Virtually all forecasts anticipate a pickup in the current quarter to about 3%," he said. "The fourth quarter began very weak because consumers stayed away from the malls in September and October, but then finished strong with a small rise in non-durable goods purchases, a renewed surge in housing and auto spending and even a small tentative rise in equipment investment. So the current quarter began stronger than the average month in the prior quarter."
The Commerce Department on Thursday said the gross domestic product increased at a 0.7% annual rate from October through December, far slower than the 4% pace recorded during the third quarter.
For all of 2002, this measure of the total output of goods and services in the U.S. increased 2.4%, far better than 0.3% increase for 2001, but down from the 3.8% pace recorded during 2000.
"This reduces the growth rate for the five quarters since the end of the recession to 2.7%, well short of the sustainable, non-inflationary growth rate of at least 3%-plus and perhaps near 4%," said Newport Communications Senior Economist Jim Haughey. "Growth needs to be sustained at 3.5% or more to begin to absorb the currently idle labor and equipment that is souring confidence and restraining investment."
He said the GDP grew at the same 2.7% rate in the first five quarters of the start of the last business expansion in 1991-92. However, Haughey said the sustainable growth rate for the U.S. economy has risen at least 0.5% in the last decade due to rapid labor productivity growth, so it feels worse this time because it is taking longer to reemploy laid off workers.
"Virtually all forecasts anticipate a pickup in the current quarter to about 3%," he said. "The fourth quarter began very weak because consumers stayed away from the malls in September and October, but then finished strong with a small rise in non-durable goods purchases, a renewed surge in housing and auto spending and even a small tentative rise in equipment investment. So the current quarter began stronger than the average month in the prior quarter."
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