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US GDP growth slows to 4% in Q4
Washington, Jan 31: US economic growth slowed to a 4 per cent annual rate in the closing three months of 2003, less than half the third-quarter pace as consumers curbed their spending, the commerce department reported on Friday.
Washington, Jan 31: US economic growth slowed to a 4 per cent annual rate in the closing three months of 2003, less than half the third-quarter pace as consumers curbed their spending, the commerce department reported on Friday.
Still, other reports showed consumer hopes remained buoyant because of low interest rates and a surging stock market as Bush administration officials moved swiftly to claim the economy was healthy ahead of November presidential elections.
The fourth-quarter expansion in gross domestic product caught markets by surprise, because it failed to meet forecasts and was far below a sizzling 8.2 per cent increase posted in the third quarter when tax-induced spending was strong.
The weaker-than-expected GDP figures spurred a sharp rise in US Treasury prices while the dollar initially weakened after the report was issued, as investors weighed whether US economic activity might not be as vigorous as thought.
Analysts noted the fourth-quarter performance was above the economy's long-term sustainable rate of 3 percent but was likely to raise questions whether consumers, whose spending has led the recovery from the 2001 recession, might be flagging.
US Treasury Secretary John Snow said relatively brisk GDP performance over the final six months of 2003 proved a recovery has set in though job creation was lagging. "We are seeing good economic news on many fronts and we are encouraged, but we are not satisfied."
Some 2.3 million non-farm jobs have been lost since the Bush administration took office, and Capitol Hill Democrats highlighted the loss after the GDP report was issued.
"President Bush has been quick to take credit for the economic growth," said Rep. Pete Stark from California and the senior Democrat on the Joint Economic Committee. "But he has yet to take responsibility for the nation's 8.4 million unemployed."
Analysts noted that consumer spending, though less robust in the fourth quarter than in the third, still was growing.
"The big issue for 2004 is whether well-above average growth is sustainable," said economist Ken Mayland of ClearView Economics LLC in Pepper Pike , Ohio .
"The fourth-quarter figure provides an object lesson," Mayland added, "The baton has been passed on to other sectors like manufacturing, inventory rebuilding and exporting with moderate but solid consumer spending."
Another report on Friday showing consumer confidence remained upbeat in January helped steady the dollar, and added to an impression that the expansion remained well-grounded.
Bureau Report
The fourth-quarter expansion in gross domestic product caught markets by surprise, because it failed to meet forecasts and was far below a sizzling 8.2 per cent increase posted in the third quarter when tax-induced spending was strong.
The weaker-than-expected GDP figures spurred a sharp rise in US Treasury prices while the dollar initially weakened after the report was issued, as investors weighed whether US economic activity might not be as vigorous as thought.
Analysts noted the fourth-quarter performance was above the economy's long-term sustainable rate of 3 percent but was likely to raise questions whether consumers, whose spending has led the recovery from the 2001 recession, might be flagging.
US Treasury Secretary John Snow said relatively brisk GDP performance over the final six months of 2003 proved a recovery has set in though job creation was lagging. "We are seeing good economic news on many fronts and we are encouraged, but we are not satisfied."
Some 2.3 million non-farm jobs have been lost since the Bush administration took office, and Capitol Hill Democrats highlighted the loss after the GDP report was issued.
"President Bush has been quick to take credit for the economic growth," said Rep. Pete Stark from California and the senior Democrat on the Joint Economic Committee. "But he has yet to take responsibility for the nation's 8.4 million unemployed."
Analysts noted that consumer spending, though less robust in the fourth quarter than in the third, still was growing.
"The big issue for 2004 is whether well-above average growth is sustainable," said economist Ken Mayland of ClearView Economics LLC in Pepper Pike , Ohio .
"The fourth-quarter figure provides an object lesson," Mayland added, "The baton has been passed on to other sectors like manufacturing, inventory rebuilding and exporting with moderate but solid consumer spending."
Another report on Friday showing consumer confidence remained upbeat in January helped steady the dollar, and added to an impression that the expansion remained well-grounded.
Bureau Report