Posted on 05/27/2004 12:16:38 PM PDT by Wolfstar
WASHINGTON (AFP) - The US economy grew at a solid 4.4 percent annual pace in the first quarter of 2004, a slightly brisker clip than first thought, but prices also warmed up, government data.
Activity picked up a bit from a 4.2 percent expansion in the last quarter of 2003, the updated Commerce Department (news - web sites) report showed Thursday.
Inflation pressures were confirmed.
Prices paid by consumers -- measured by the so-called personal consumption expenditure deflator -- rose 3.0 percent, up from a 1.0 percent rise in the last quarter of 2004.
But company profit growth slowed.
After-tax corporate profits grew 13.3 billion dollars in the first quarter after surging 68.2 billion dollars in the previous three months.
Still, net profits were up by 36.7 percent when compared with last year, the strongest performance in 23 years.
The report confirmed a picture of an economy growing at a healthy rate, albeit down from a 19-year record pace of 8.2 percent struck in the third quarter of 2003, but with inflation rearing its head.
"While high oil and gas prices and interest hike concerns weigh on consumers' minds, the recovering labor market and continued strong demand for goods and services should keep the economy on a solid growth path this year," said Wells Fargo Bank chief economist Sung Won Sohn.
Since the first quarter, jobs have boomed, with the economy churning out 288,000 new jobs in April, after creating 337,000 in March.
Inflation fears, too, have risen, in part because of record-high gasoline prices, fuelled by a lack of refineries and by a boiling crude oil market, heated by the uncertain security outlook for Middle East supplies.
"Rising inflation is typical of this phase of the economic cycle as increases in demand put pressure on scarce resources," said Wachovia Corp. chief economist John Silvia.
On May 4, Federal Reserve (news - web sites) policymakers froze the key federal funds target rate, which banks charge each other overnight, at a 1958 low of 1.0 percent but said rates can eventually rise at a "measured" pace.
Many analysts predict rates will go up as soon as the June 29-30 meeting of the Federal Open Market Committee.
Business economists see the US economy gathering momentum through 2004 as job growth accelerates, with inflation edging modestly higher.
The National Association of Business Economists boosted its forecast for 2004 US gross domestic product (GDP) growth to 4.7 percent, up from 4.6 percent in February, a survey showed Monday.
The biggest risk to the outlook, according to the economists surveyed, was a possible terrorist attack on the United States, with high energy prices and rising interest rates also seen as potential threats.
A breakdown of the Commerce Department report for the first quarter showed:
-- Consumers were still the main engine, boosting expenditure 3.9 percent.
-- Federal government spending shot up 9.2 percent, including a 13.2 percent leap in defense expenditure.
-- Imports, which brake the growth rate, rose 5.9 percent, less than first thought. Exports climbed 4.9 percent.
-- Private businesses, likely sensing better times ahead, increased their stockpiles by 28.2 billion dollars in the first quarter, more than triple the 9.0 billion dollars recorded in the previous three months.
-- Final sales, a key measure of demand in the economy, rose 4.6 percent.
Investors cheered the news.
Wall Street's blue-chip Dow Jones index of 30 top stocks was up 83.82 points, or 0.83 percent, at 10,193.71 by late morning.
PKM, more good news to buck up FReeper spirits.
Great News for 45% of the country.
Reminds me of the absurd Sasser statement of the past.
"THERE'S TOO MUCH CONSUMINNNNN' GOIN' ON OUT THAAEEAA"!!
TDIDS (I always wanted to be the first one to post that)
That was the anti-Semitic bigot Fritz Hollings.
The deflator, is it? Paycheck deflator. 3% sounds about right if it is for the qurter. That's 12.5% per annum, which my wallet says is, if anything, a little low.
How much longer can the RATs keep talking down the economy?
If the gas price problem is solved, they will think of something else to complain about. No doubt.
Isn't it great that Sasser is out of elective office and Hollings is soon to follow. I think Sasser is a lobbyist somewhere, though.
Funny you should mention that, because this is also in today's economic news: U.S. stocks rose on Thursday, as a drop in oil prices below $40 eased worries about the impact of high energy costs on the economy.
Now, I fully realize that one price drop doesn't mean gas prices will come down soon, but if oil prices moderate and continue down, gas prices should follow by the end of the summer.
Presumably that's an annualized rate. We're not anywhere near 12% inflation.
An 89 cent can of chili beans is $1.29 now. And while we are discussing gas, gasoline has been increasing at an annual rate of 46% lately. This is the personal consumption deflator. This is the inflation we care about, not that bogus national inflation index they use to rate Ibonds.
Great leaders just fade away.
Anticipate seeing the name Sasser bandied about for some time!!
Sorry for my error, and thanks for reminding me!
If I recall correctly (this time) Sasser was brought to media prominence through his concerns for our "Daffocit.
I blame George W. Bush for this.
How to solve the gas problem: drive less, carpool, go to the cheaper gas stations. That's the honest to God truth. The less we use, the more likely they are to lower the price. We all went out and bought SUVs and consumption went up.
The other way is to drill for oil in the US and do away with the ridiculous constraints the wack-jobs are putting on refineries.
The final way is to drive hybrids if/when you can. We have a hybrid in my family and drive it for the long or semi-long distance drives - it saves us tons of cash.
And if I were in charge I'd invade and take Iraq's oil to pay for all the bombs we had to drop on them, but that's just me...
You are correct on all points.
I'm hoping the hydrogen cell cars are mass produced and we never have to be dependent on foreign oil ever again.
"Hydrogen cars"
Totally agree with that one. On top of the advantage of letting the islamic world implode without a backwards glance, there's a certain "coolness" factor to be said for hydrogen cars :) At least, for a little while.
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