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Commerce Department: Economy's growth falls short of initial projections
Saturday, August 28, 2004 | No comments posted.
WASHINGTON (AP) - Weighed down by high energy prices, the economy was even more sluggish than initially believed during the second quarter. But Federal Reserve policy-makers believe the pace will pick up in coming months, something President Bush is counting on as the election approaches.
The Commerce Department reported Friday that gross domestic product grew at a 2.8 percent annual rate in the April-to-June quarter, down from an earlier estimate of a 3 percent pace. The new GDP reading - the smallest gain in just over a year - indicated the economy slowed considerably compared with the brisk 4.5 percent growth rate in the first quarter of 2004.
"We're no longer sprinting, but we are not running out of wind either," said Richard Yamarone, economist at Argus Research Corp.
Gross domestic product measures the value of all goods and services produced within the United States and is considered the broadest barometer of the economy's fitness.
The new figure was slightly better than the 2.7 percent rate economists were expecting, but it still provided fresh evidence of the "soft patch" that Federal Reserve Chairman Alan Greenspan said the economy had hit in June.
Greenspan and his Fed colleagues, in boosting short-term interest rates Aug. 10, however, had said the economy appeared "poised to resume a stronger pace of expansion" in the months ahead.
Private economists believe the economy is gaining momentum in the current July-to-September quarter, with growth rate estimates ranging from 3 percent to 4 percent. The government's first estimate of third quarter GDP will be released Oct. 29 - just days before the Nov. 2 elections.
On Wall Street, the Dow Jones industrial gained 21.60 points to close at 10,195.01.
Although economists believe the Fed will raise interest rates for a third time this year on Sept. 21, they said much hinges on the August employment report, to be issued next week.
Greenspan didn't address the future course of interest rates in a speech Friday. But he warned that the country will face "abrupt and painful" choices if Congress does not move quickly to trim the Social Security and Medicare benefits promised to the baby boom generation.
The latest snapshot of economic activity comes as Bush gears up for the Republican convention, and the presidential election is just over two months away.
Bush and his Democratic opponent, John Kerry, joust frequently over the economy's health and the availability of jobs.
The Commerce Department reported Friday that gross domestic product grew at a 2.8 percent annual rate in the April-to-June quarter, down from an earlier estimate of a 3 percent pace. The new GDP reading - the smallest gain in just over a year - indicated the economy slowed considerably compared with the brisk 4.5 percent growth rate in the first quarter of 2004.
"We're no longer sprinting, but we are not running out of wind either," said Richard Yamarone, economist at Argus Research Corp.
Gross domestic product measures the value of all goods and services produced within the United States and is considered the broadest barometer of the economy's fitness.
The new figure was slightly better than the 2.7 percent rate economists were expecting, but it still provided fresh evidence of the "soft patch" that Federal Reserve Chairman Alan Greenspan said the economy had hit in June.
Greenspan and his Fed colleagues, in boosting short-term interest rates Aug. 10, however, had said the economy appeared "poised to resume a stronger pace of expansion" in the months ahead.
Private economists believe the economy is gaining momentum in the current July-to-September quarter, with growth rate estimates ranging from 3 percent to 4 percent. The government's first estimate of third quarter GDP will be released Oct. 29 - just days before the Nov. 2 elections.
On Wall Street, the Dow Jones industrial gained 21.60 points to close at 10,195.01.
Although economists believe the Fed will raise interest rates for a third time this year on Sept. 21, they said much hinges on the August employment report, to be issued next week.
Greenspan didn't address the future course of interest rates in a speech Friday. But he warned that the country will face "abrupt and painful" choices if Congress does not move quickly to trim the Social Security and Medicare benefits promised to the baby boom generation.
The latest snapshot of economic activity comes as Bush gears up for the Republican convention, and the presidential election is just over two months away.
Bush and his Democratic opponent, John Kerry, joust frequently over the economy's health and the availability of jobs.
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