The U.S. economy expanded during the last three months of 2000 at a slower pace than thought, growing at an annual 1.1 percent rate, its weakest performance in more than five years.
The anemic performance of the gross domestic product–the total output of goods and services produced within the U.S.–came as the economy was battered by declining exports and spending on durable goods in the fourth quarter.
The Commerce Department report showed how dramatically the economy had slowed: The revised figure was half the 2.2 percent rate of the third quarter and a fraction of the hectic 5.6 percent pace of the second quarter.
The fourth-quarter annual growth rate was the smallest since 0.8 percent in the 1995 second quarter. It was revised downward from an already weak 1.4 percent estimated a month ago.
“We are in a meaningful slowdown,” said Robert Dederick, economic consultant to Northern Trust Corp. in Chicago.
“What we saw was that the quarter saw a dramatic slowing in final sales, but we did manage to slow the rate of inventory accumulation.”
Meanwhile, a separate report pointed to a potential uptick in the manufacturing sector–one of the hardest-hit areas of the economy–but not enough to suggest that manufacturing has climbed out of its slump, economists said.
The regional Chicago-area purchasing managers index rose to 43.2 in February from January’s 40.2 reading, exceeding forecasts and suggesting that Thursday’s report from the National Association of Purchasing Management may show similar improvement.
Readings below 50 signal a contracting manufacturing economy, while levels above 50 suggest expansion.
Although some analysts said the numbers could be affected by an improving auto sector, which won’t necessarily be borne out nationally, some saw signs for optimism.
“What was encouraging about it was the rise in production and new orders, especially the rise in new orders, because that suggests further production gains in the next six months,” said Jennifer Rossum, an economic analyst with Thomson Financial.
In the GDP report, a closely watched inflation gauge rose at an annual rate of 1.9 percent in the quarter, up from 1.8 percent in the third quarter. For all of 2000, this gauge–which measures the price increases on consumer goods–was up 2.4 percent, the highest since 1993.
Even with the slowdown in the latter part of last year, the economy grew by 5 percent in 2000, the best showing since a 7.3 percent rise in 1984. It capped a remarkable four-year period in which growth every year was above 4 percent, the best performance since the mid-1960s.
