The U.S. economy did better in the fourth quarter than first thought. The Commerce Department released figures this morning showing the nation’s Gross Domestic Product grew at a 1.4% rate in the final quarter of last year
, a big increase from their original estimate of 0.2%.
For all of 2001, this measure of the nation’s total output of goods and services increased 1.2%, the weakest performance since a 0.5% drop in 1991.
This change should be interpreted as evidence that December was very strong, says Newport Communications Senior Economist Jim Haughey.
“Look for growth of at least 1.5% in the current quarter, because January started the quarter well above the average of the previous quarter," he says. "The first reports for 2002 are very strong. Home sales hit a record level in January. Consumer confidence fell a bit but was still high. The pace of layoffs continues to decline. And sales of durable manufacturing goods, the most cyclical part of the economy, rose at more than a 30% annual rate.”
Haughey says the principal upward revisions were for consumer spending and lower imports, because the latter is a subtraction in calculating GDP.
“With hindsight, the much publicized 2001-2002 recession turns out to be the smallest one ever," Haughey says, "with GDP declining only 0.3% in the third quarter. Without the September 11th disruptions to the economy, there would have been no recession."