Text 9327, 104 rader
Skriven 2005-02-26 06:10:00 av Jeff Binkley (1:226/600)
Ärende: Economy
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More bad news for the democrats.  I doubt the mainstream media will make much
of this.  Watch the deficit come in much lower than expected.

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http://biz.yahoo.com/ap/050225/economy_16.html

Associated Press
4th Quarter Growth Stronger Than Expected
Friday February 25, 7:28 pm ET
By Jeannine Aversa, AP Economics Writer

Economy Grows at a 3.8 Percent Rate in Final Quarter of 2004; May Be Good News
for Jobless


WASHINGTON (AP) -- The economy clocked in at a 3.8 percent pace in the final
quarter of 2004 -- faster than initially thought -- and is now cruising at that
speed or better. That could be good news for jobless people hoping for
companies to increase hiring.


In the newest reading on the economy's fitness, the gross domestic product
exceeded a previous estimate of a 3.1 percent annual growth rate 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.

The improvement reflected more robust spending by businesses on capital
equipment and on inventories of goods. The trade deficit also was less of a
drag on fourth-quarter growth than initially thought.

Although economic growth in the final quarter of last year was a bit slower
than the third quarters' 4 percent, the performance was still solid.

"We are now at a comfortable cruising altitude," said Lynn Reaser, chief
economist at Banc of America Capital Management. "What is significant is that
all parts of the economy were pulling their own weight."

In other news, sales of previously owned homes slipped 0.1 percent in January
from the previous month to a seasonally adjusted annual rate of 6.80 million
units, the National Association of Realtors reported. Even with the dip, sales
remained healthy, analysts said.

On Wall Street, the GDP report lifted stocks. The Dow Jones industrials rose
92.81 points to 10,841.60, the best close since Dec. 28.

For the current January-to-March quarter, the economy is expected to grow at a
rate of around 4 percent, some economists project.

Analysts are hoping that with the economy moving ahead at a good pace,
companies will feel more inclined to step up hiring in upcoming months.
Economists predict the nation's payrolls will expand by a sizable 225,000 in
February, which would be up from January's 146,000 gain. The government
releases the February employment report next week.

"With decent momentum entering the New Year, we should soon be generating the
kind of job growth that will make the expansion feel like good times," said
Bill Cheney, chief economist at John Hancock Financial Services. The jobs
market was slower to recover from the 2001 recession than other parts of the
economy, a source of frustration to jobseekers.

President Bush wants the economy and the labor market on firm footing,
especially as he tries to sell the country on an overhaul of Social Security. A
cornerstone of his plan would let workers set up private investment accounts in
stocks and bonds, using a majority of their payroll taxes to do so. Democrats
generally oppose the idea and some Republicans in Congress are wary as well.

Federal Reserve Chairman Alan Greenspan last week struck a positive note on the
economy's performance, telling Congress: "All told, the economy seems to have
entered 2005 expanding at a reasonably good pace, with inflation and inflation
expectations well anchored."

Fed policy-makers are expected to boost short-term interest rates March 22,
which would mark the seventh increase since June, to keep the economy and
inflation on an even keel.

In the GDP report, businesses clearly did their part to carry the economy in
the final quarter of last year. That's especially encouraging because it was
deep cuts in companies' capital spending that helped push the country into
recession and restrained the subsequent recovery.

Businesses boosted spending on equipment and software at a 18 percent rate in
the fourth quarter. That was up from a previous estimate and surpassed the 17.5
percent pace in the third quarter.

Such brisk investment was stoked partly by companies taking advantage of a
temporary provision, which expired at the end of 2004, allowing them generous
write-offs on capital equipment, analysts said. Some economists questioned the
vigor of future capital spending with that stimulus gone.

Business investment in new plants and other buildings, as well as in building
up supplies of goods also were stronger in the fourth quarter than previously
thought.

Consumer spending grew at a solid 4.2 percent pace in the final quarter. That
was down a bit from the government's initial estimate as well as the 5.1
percent growth rate registered in the third quarter. During the recovery, the
economy was largely carried by consumers.

"We had a nice handoff from the final quarter of last year, and a good starting
point for this year," said Tim O'Neill, economist at Bank of Montreal.

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