Will First Quarter U.S. GDP Be Less Than Expected?

March 30, 2005
A number of economists were looking for fourth quarter 2004 U.S. GDP to be revised upward to a 4% annual rate. But when the U.S. Commerce Department reported its third and final read of economic activity for last year's final quarter on March 30, the ...

A number of economists were looking for fourth quarter 2004 U.S. GDP to be revised upward to a 4% annual rate. But when the U.S. Commerce Department reported its third and final read of economic activity for last year's final quarter on March 30, the figure was the same it reported about a month ago: 3.8%. Small upward revisions in exports and consumer spending for manufactured durable goods were offset by a downward revision in inventories.

Does this mean that economists expecting first quarter GDP to come in at 4% or higher are forecasting too high? It could be, but Commerce's first read of first quarter economic activity won't be published until April 28.

On March 30, the Commerce Department also reported that corporate profits from current production increased 15.7% in 2004, just over a percentage point lower than 2003's 16.8% increase. Corporate profits before tax increased 12.7% in 2004, compared with a 15.4% increase in 2003. "In 2004, the difference between the increase in profits from current production and the increase in profits before tax was mainly due to the effects of the Job Creation and Worker Assistance Act of 2002 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, which allowed accelerated depreciation and lowered before-tax profits," the department explained. A special 50% accelerated depreciation provision expired at the end of 2004.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

 John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.
      
      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).
      
      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.
      
      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”
      
      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.
      
      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.
      

 

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!