WASHINGTON - The U.S. economy, hammered by declining exports and spending on durable goods, grew at an annual rate of only 1.1 percent in the final three months of 2000, the weakest performance in more than five years, according to an Associated Press article Feb. 28, 2001.
| For More Information ... |
|
For information about how to cope with a down economy click the following link for an article from green industry consultant Phil Nilsson. |
The anemic performance of the gross domestic product - the total output of goods and services produced within the United States - was only slightly above the expectations of many private economists. They were predicting a growth rate of 1.0 percent.
The weak showing in the fourth quarter, reported Wednesday by the Commerce Department, demonstrated how dramatically the economy had slowed since the second quarter of last year, when it grew at a hectic pace of 5.6 percent.
The fourth-quarter annual growth rate of 1.1 percent was the smallest since 0.8 percent in the second quarter of 1995. It was revised downward from an already-weak 1.4 percent estimated a month ago.
On Tuesday, worries about jobs and the business climate showed consumer confidence in February being dragged to its lowest level in more than four years. The pessimism was reinforced by two Commerce Department reports: Orders to U.S. factories for big-ticket items plunged in January to their lowest level in 19 months, while new home sales plummeted 10.9 percent, the biggest drop in seven years.
The new report came shortly before Federal Reserve Chairman Alan Greenspan delivered a sober assessment of the economy to Congress, saying the sharp slowdown that began in the second half of last year "has yet to run its full course."
Greenspan's comments sent a clear signal that the central bank, which already reduced interest rates by a full percentage point in January, is ready to do more to prevent the faltering economy from skidding into a recession.
Testifying before the House Financial Services Committee, Greenspan blamed much of the economy's weakness on an effort by businesses to cut back quickly on production in the face of falling sales.
In his address to Congress Tuesday night, President Bush promoted his big tax-reduction proposal as needed to rev up the sagging economy. And Greenspan has given his blessing to cutting taxes, saying the government's budget surplus projections have grown so large there should be money available both to eliminate the public debt and provide a significant tax cut.
An inflation gauge tied to the gross domestic product rose at an annual rate of 1.9 percent in the fourth quarter, up from 1.8 percent in the third quarter. For all of 2000, this gauge - which measures the price increases on consumer goods - was up 2.4 percent, the highest since 1993.
Spending on big-ticket durable goods such as automobiles and other costly manufactured goods expected to last at least three years fell at an annual rate of 2.8 percent in the fourth quarter, compared with a strong 7.6 percent rate of growth in the third quarter.
U.S. exports declined 6.1 percent, compared with a 13.9 percent increase in the third quarter.
The economic slowdown has brought thousands of job layoffs across a number of industries. Economists have begun to fear that the nation's decade-long economic expansion, the most prolonged in history, may be in danger of ending.
On Wall Street, investors have been hoping that the Federal Reserve might be preparing another surprise cut in interest rates, like the one on Jan. 3.
Even with the dramatic slowdown in the latter part of last year, however, the economy grew by 5.0 percent in 2000, the best showing since a 7.3 percent rise in 1984. That capped a remarkable four-year period in which growth every year was above 4 percent, the best performance since the mid-1960s.
In the fourth quarter, business investment on new plants and equipment - a major force behind the economic expansion - slipped 0.6 percent, compared with a surge of 7.7 percent in the third quarter.
All the changes show the economy growing at an annual rate of $24.7 billion in the last three months of 2000, pushing the nation's total output of goods and services to around $9.4 trillion, after adjusting for inflation.
For more economic information find the gross domestic product report at www.bea.doc.gov.