Minimal Growth Revealed in Gross Domestic Product
WASHINGTON (AP) _ Government figures released Wednesday showed the economy virtually stood still in the fourth quarter, leading public and private economists to predict that any meaningful recovery is months away.
The Commerce Department said Wednesday the minuscule growth _ at an annual rate of 0.3 percent _ in the gross domestic product was due mainly to a spurt in exports and a modest revival in the housing sector. And some experts contend those gains will prove short-lived.
Most other components of the GDP showed little or no strength, including consumer spending, which accounts for two-thirds of the nation's economic activity and is essential for any sustained growth.
For the year, the GDP sank 0.7 percent, the first annual decline since percent drop in 1982, the final year of the previous recession. The GDP is the nation's total domestic output of goods and services.
"Basically, it says the economy is stalled," said Sung Won Sohn, an economist with Norwest Corp. in Minneapolis. "The economy was treading water at the end of the year," concurred Mark Zandi of Regional Financial Associates in West Chester, Pa.
Acting Commerce Secretary Rockwell Schnabel called the sluggishness "clear and convincing evidence" of the need for quick congressional enactment of the economic growth package President Bush outlined Tuesday night in his State of the Union message.
Still, Federal Reserve Chairman Alan Greenspan told Congress on Wednesday the central bank is beginning to see "some very subtle signs that the erosion in the economy is beginning to stabilize."
He also suggested "this economy can move out of this extreme lethargy with monetary policy alone" and without the huge tax cuts that Bush and many congressmen are proposing.
Even with the growth package and the impact of lower interest rates, a sustained recovery will not begin before spring, cautioned Commerce chief economist Antonio Villamil at a news conference.
Zandi agreed, saying, "We should begin to see more signs of growth by summer and maybe as late as fall in response to the significant drop in interest rates and perhaps as a result of any fiscal stimulus."
But any growth this year is likely to be sub par, compared to other post-World War II recoveries, many economists agree.
Sohn, for instance, projects the GDP will grow about 2 percent this year, just a third of the 6 percent average growth during the first year of recent recoveries. …