It certainly wasn't bad enough to raise deflation fears again. But the U.S. Commerce Department's first read of fourth-quarter 2004 GDP, released on Jan. 28, is enough to give manufacturing executives pause for thought. At a seasonally adjusted annual rate of 3.1%, the figure for the October-through December quarter was below both economists' expectations and the long-term average growth rate of the U.S. economy. It was also well below the 4% annual rate recorded in 2004's third quarter.
"The economy experienced unbalanced growth in the final quarter of 2004," says David Huether, chief economist at the National Association of Manufacturers, Washington, D.C. "But the domestic economy continued on a robust path as consumer spending rose a strong 4.6% and business investment surged 10.3% -- the third consecutive quarter of double-digit growth," he added.
Huether characterizes the estimated 3.9% decline in U.S. exports during the fourth quarter -- sharp contrast to a 6% increase during the third quarter -- as "clearly disappointing." But he emphasizes the actual trade figures for December aren't yet in. "If we see a rebound [from November's unexpected drop in exports] in December, there will likely be a significant upward adjust in both exports and GDP. " The Commerce Department is scheduled to release its second read of fourth-quarter 2004 GDP on Feb. 25.