GDP Growth Nudged Upward

By John S. McClenahen The value of goods and services produced in the U.S. during the fourth quarter of last year grew just a bit faster than first estimated, the U.S. Commerce Department reported Feb. 27. Inflation-adjusted GDP increased at an annual rate of 4.1% from October through December 2003, one-tenth of a percentage point higher than the 4% reported on Jan. 30 and half a percentage point above the 3.6% rate economists generally expected. In the third quarter of 2003, real GDP rose at an annual rate of 8.2%, twice the fourth-quarter rate. Commerce plans to release its final fourth-quarter GDP figure on Mar. 25. In the meantime, forecasts for the current quarter range from an annual rate of about 3% to about 5%. However, the latter figure could prove to be unrealistically high. USB Investment Research, New York, notes that the Feb. 27 revision to fourth-quarter 2003 GDP was a result of higher inventories and not stronger final demand and says that suggests "inventories will be fractionally less helpful to growth" for early 2004. The Commerce Department is slated to release its first read of first-quarter 2004 GDP on April 29.

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