U.S. economy soared to an annual growth rate of 7.3 percent in the final three months of 1999, the strongest performance in 15 yearsgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Economy Continues to Soar More Interest Rate Hikes Seen
By Martin Crutsinger
The Associated Press
W A S H I N G T O N, March 30 The supercharged U.S. economy soared to an annual growth rate of 7.3 percent in the final three months of 1999, the strongest performance in 15 years, the government said today.
The increase in the gross domestic product the countrys total output of goods and services marked a better-than-expected upward revision from an estimate a month ago that the GDP was expanding at a 6.9 percent rate in the fourth quarter.
The higher final estimate reflected new data showing that U.S. exports were stronger than previously believed and business construction was increasing at a faster pace than earlier estimated.
The Commerce Departments last look at GDP performance in 1999 underscored just how much momentum the economy had going into 2000. The Federal Reserve, fearing unchecked growth could worsen inflation, has already raised interest rates twice this year, in February and last week, following three rate increases in 1999.
More Rate Hikes Anticipated
Many economists are predicting at least two more rate boosts before midyear as the Fed continues trying to cool an economy it believes is growing faster than the countrys ability to supply workers and products for a seemingly insatiable consumer.
The rate increases are designed to raise borrowing costs for big-ticket items such as homes and cars and in that way cool off demand and keep inflation from getting out of hand.
Critics, however, have charged that the Fed is fighting a phantom menace with no signs, outside of energy, of any price pressures despite the rapid growth.
An inflation index tied to the GDP showed that prices remained well-controlled in the fourth quarter of last year, rising at an annual rate of just 2 percent, up only slightly from a 1.7 percent rate of increase in the third quarter.
Jobless Claims Rise
In a second report today, the Labor Department said the number of Americans filing new claims for unemployment benefits rose by 3,000 last week to 266,000. But even with the slight increase, the nations job market remained the tightest it has been in decades. The four-week moving average for claims declined to 268,000, the lowest level since Dec. 15, 1973.
The report on jobless claims was just the latest indication that the economy has continued to speed ahead this year. Many analysts are predicting first-quarter growth will come in well above 5 percent. While that will be slower than the fourth quarter, it is still above the Feds speed limit of around 3.5 percent for growth at this stage of the expansion.
The Commerce Department also reported today that after-tax corporate profits were up 2.7 percent in the fourth quarter, the best showing since a 7.4 percent jump in the first quarter of 1999. After-tax profits had been up 2.2 percent in the third quarter.
For all of 1999, after-tax corporate profits jumped 8.8 percent, the government said.
Economic Expansion Continues
The 7.3 percent rate of increase in the GDP in the fourth quarter was the biggest quarterly surge since a 9 percent growth rate in the first quarter of 1984.
However, the 1984 increase occurred as the country was still climbing out of the severe 1981-82 recession, the worst downturn since the Great Depression.
In contrast, the 7.3 percent growth spurt occurred as the expansion was about to set a record for longevity, a period when economic growth historically could be expected to slow as pent-up consumer demand is satisfied.
The current expansion, which began in March 1991, recorded its 107th month of uninterrupted growth in February, beating the previous record for a period without a recession, the 1960s expansion, which lasted 106 months.
-- (firstname.lastname@example.org), March 31, 2000
"final three months of 1999" it was all those last minute preps
-- Johnny (Not@anymore.net), March 31, 2000.
This is hardly what I would call a "strong" economy. People are borrowing on credit to buy into a pyramid scam of technology stocks and using what they perceive as profits to go out and buy excessively a lot of things that they don't need and can't afford. When the markets crash big-time, what are we left with?... a nation in severe debt, with no money or income to pay it back. Loan defaults and bankruptcies on an astronomical scale, and a depression that we may never come out of.
-- Hawk (email@example.com), March 31, 2000.
Don't forget to include out "incredible" balance of trade deficits, month after month!
-- Flash (firstname.lastname@example.org), March 31, 2000.