Economy Grows at Healthy 4.1 Percent Rate




Feb 27, 8:39 AM (ET)

By JEANNINE AVERSA



WASHINGTON (AP) - America's economy, bolstered by brisk business spending, grew at a healthy 4.1 percent annual rate in the final quarter of 2003. That was even faster than first thought and offered new evidence that the nation's economic recovery was firmly rooted going into the new year.

The latest reading on the gross domestic product - the broadest measure of the economy's health - was slightly better than the 4 percent pace estimated a month ago for the October-to-December quarter, the Commerce Department reported Friday. GDP measures the value of all goods and services produced within the United States.

Even though the fourth quarter's growth rate marked a slowdown from the red-hot 8.2 percent pace of the third quarter - the best in nearly two decades - it nonetheless represented a solid performance.

The 4.1 percent pace was better than economists were predicting. They were forecasting growth rate of around 3.8 percent.



Looking ahead, the economic picture seems promising, analysts say. Economic growth in the current January-to-March quarter is expected to clock in at a rate of around 4.5 percent or higher, according to some analysts' projections.

For out of work Americans, though, these are still frustrating times even as the economy is in recovery mode. Job growth has been painfully slow. The economy has lost 2.2 million jobs since President Bush took office in January 2001, a sore spot as he seeks re-election. Democratic presidential contenders have seized on this to make the argument that his economic policies are not working.

Federal Reserve Chairman Alan Greenspan and other economists, however, are hopeful that companies will step up hiring in the coming months.

In an especially encouraging sign that companies are feeling more confident in the staying power of the recovery, they boosted investment in equipment and software in the fourth quarter at a sizable 15.1 percent annual rate. That was stronger than the 10 percent rate first estimated and was a main factor in GDP being revised upward for the fourth quarter.

Another factor: Businesses were more aggressive than previously thought in adding to their stockpiles in the fourth quarter. Business inventory building added 0.92 percentage point to fourth-quarter GDP, even better than the 0.61 percentage-point increase estimated a month ago. That also was a sign that businesses were betting on stronger appetites for their goods.




A sustained turnaround in capital spending by business is a key ingredient for the economic recovery to be lasting. It was deep cuts to such spending that thrust the economy into a recession in 2001. The economy has struggled mightily to get back on firmer footing and finally in the second half of 2003 managed to cast off its lethargy.

The economy's performance in the second half of last year marked the best back-to-back quarterly performance since the first two quarters of 1984.

Economists are heartened that businesses appear to be doing more to keep the economy going. Throughout economic hard times and during most of the recovery consumers have been doing the heavy lifting.

In the fourth quarter, consumers spent modestly and increased their spending at a 2.7 percent annual rate, slightly stronger than the 2.6 percent pace estimated a month ago. Still, that marked a slowdown from the third quarter as consumers spent lavishly - powered by extra cash from a home-mortgage refinancing frenzy and the president's third round of tax cuts.

Analysts predicted the economy would slow in the fourth quarter compared to the third quarter's scorching pace as the stimulative impact of refinancing and the tax cuts faded.

Consumers in fact trimmed spending on big-ticket goods, such as cars, at a 0.1 percent rate in the fourth quarter, the first decline since the second quarter of 2000.

Although economists believe consumers will keep their pocketbooks sufficiently open to help along the economy, they are still keeping a close eye on their behavior. Some economists worry that consumers might turn more cautious given the lackluster job market.

http://apnews.myway.com/article/20040227/D80VKHB80.html



This is the third fantastic quarter in a row for the Bush economy. It's great news going into an election year.

and then the tax refunds will be all spent...leaving us back to where we were before people got a lump sum of money...

actually everyone is expecting the democratic office takeover and are feeling more confident already.

i still think it's the money, the only reason people can spend money is they have it...otherwise it's...sitting at home talking about what you'll do when you have money, finding joy in the simplier aspects of life...

The tax cuts don't give you a lump sum of money. They give you more money in every paycheck. Your tax refund gives you a lump sum of money.

All the polls expect Bush to be re-elected. The record economy we are experiencing will make that even more likely.

i believe i said tax refund in my post...the tax cuts don't do a damn thing for me, i don't make enough money, or own enough property...

Yes, you did, my bad.

I hope you do not want to deny those who do pay all the taxes for those of you who don't, to keep more of their own money, and stimulate the economy.

no, in today's economy people need to save as much as they can...tomarrow they may not have a job, i'm just pointing out they don't do anything for me...or my family...i owe that to the children.

Actually, the tax cuts have given us the best economy in the last 20 years, and that makes your prospects for higher pay, a better job, and more prosperity greater.

By increasing tax revenues through this record economic growth, it will also shrink the deficit faster, and that definitely helps your children.

i'll believe it, when i see it...i'm a witch, i place more faith in what i observe than what i'm told...

You have to go out and get it. It won't come to you.

Good luck, I hope you have a great year!

i always have a good year, and have had so since i've married...i've got a wonderful husband...it's to him and our desire to work that we owe it too...

we work as much as we can balancing childcare between the two of us...i'd be happy if they made it easier to gain and afford reliable childcare that's available when most of the well paying jobs are hiring for...like after six thirty pm...it's to a point we're bringing my mother down...

instead of wasting money with job training...why not put it to something like a national childcare type of plan...helping those who desire to work out rather than those who act like they want to work for handouts?

it isn't the best economy in 20 yrs and there are many unemployed people as well as those of us that are low paid that would care to argue on that. they keep printing numbers but i haven't been affected. like jordyn said, i'll believe it when i see it. i'll believe it when i start seeing job opportunities hitting my inbox or local engineering companies start to hire. or i get a raise. until then its all numbers. we can all throw statistics around and gloat but it isn't until the fact happens. 4.1 doesn't mean shit to me until gary tells me sales have really picked back up. be it we've seen an increase here, it isn't lile the flood gates have opened.

meanwhile unemployment is still high, and its still a jobless recovery. Making it almost certain that people will be voting for Kerry this year and as the polls indicated Kerry could beat Bush if he ran we ran the election today, even despite all the attack adds Bush has been releasing.

Kerry will win.... probably be a blowout....

The jobless rates insure that no matter what the econimists say there are those sitting at home watching thier unemployment benefits run out.....

Unemployment is around 5.6%, lower than the average for the last 3 decades.

Care to make a wager on that?

You mean the low jobless rates?

actually those numbers were proven to be skewed, since people couldnt get a job for so long many have stopped looking completely. the jobless rate hasnt been this high since the depression.