U.S. economic growth at 4 percent
By James P. Miller
Chicago Tribune
The nation's economy grew at a good — but not great — 4.0 percent annual rate in the year's final quarter, a slower-than-expected pace that suggests high unemployment is likely to remain a sore subject as the presidential election year plays out.
The U.S. gross domestic product's fourth-quarter growth "further demonstrates that a good recovery is under way," maintained Treasury Secretary John Snow.
But while the report shows that the economy is still gaining strength, most experts had been anticipating GDP growth in the 4.5 percent to 5 percent range. As a result, yesterday's Commerce Department report landed with something of a thud.
The economy's performance was "decent" in the final quarter, said Brian Nottage, of the consulting firm Economy.com. Nonetheless, he said the 4.0 percent expansion probably isn't strong enough to create a significant number of new jobs.
The GDP report "indicates that the jobless recovery has limited consumer spending, the lion's share of the economy," noted Sung Won Sohn, economist with Minneapolis-based Wells Fargo & Co.
For Wall Street, "there are reasons for nervousness" in the Commerce Department report, said David Wyss of Standard & Poor's Corp. The GDP numbers "aren't a disaster," he said, "but we expected better."
In 2003's third quarter, GDP grew at a breathtaking 8.2 percent annual rate as the economy got a temporary boost from heavy government expenditures and from a burst of spending from consumers who were flush, thanks to tax-rebate checks from Uncle Sam and cash from mortgage refinancings.
No one had expected the fourth quarter to match
the superheated third quarter, which enjoyed the biggest surge in three-month GDP growth in nearly two decades.
The disappointing growth measure means more time will have to pass before economists and politicians learn whether the economy's upturn, which haltingly got under way in 2002 and finally accelerated in mid-2003, will become self-sustaining.
Not everyone was discouraged: The National Association of Manufacturers called yesterday's announcement "a very balanced and healthy GDP report."
And Wachovia Group chief economist John E. Silvia called the performance "strong enough to improve incomes and profits and yet not so strong as to raise fears of sooner-than-(expected) Fed increases in interest rates."
