[Mb-civic] NYTimes.com Article: U.S. Growth Pace for 2nd Quarter Is Revised Downward, to 2.8

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U.S. Growth Pace for 2nd Quarter Is Revised Downward, to 2.8

August 28, 2004
 By BLOOMBERG NEWS 



 

By Bloomberg News 

The economy grew at a 2.8 percent annual rate from April
through June, slower than the government estimated last
month, as higher oil prices limited consumer spending and
contributed to a record trade deficit, the Commerce
Department reported yesterday. 

Gross domestic product, the value of all goods and services
produced, was the weakest in more than a year and lower
than the 3 percent annual pace previously reported. 

In another report, consumer confidence fell in August, a
University of Michigan survey showed. 

Oil prices approached $50 a barrel last week, prompting
some economists to trim second-half growth forecasts on
expectations that higher fuel bills would reduce demand for
other goods. Consumer spending in the second quarter grew
at the weakest pace since the recession in 2001. 

The University of Michigan final index of consumer
sentiment dropped to 95.9 this month from 96.7 in July, a
smaller decline than predicted. The median forecast in a
Bloomberg News survey was for the drop to match a
preliminary reading of 94 on Aug. 13. 

The gross domestic product was also higher than the median
estimate of 2.7 percent. The growth, which followed a 4.5
percent increase at an annual rate in the first quarter,
was higher than forecast partly because of revisions to
both business and consumer spending. 

Business investment in equipment and software was revised
up in the quarter to the strongest pace since the third
quarter of last year. Consumer spending was also revised,
to a 1.6 percent annual rate, from 1 percent, while
remaining below the 4.1 percent rate of the year's first
three months. Corporate profits after taxes for the quarter
rose 17.9 percent in the 12 months ended in June. 

A measure of inflation tied to consumer spending slowed.
The core personal consumption expenditures index, which
excludes food and energy, rose at a 1.7 percent annual rate
in the second quarter, down from the 1.8 percent rise
initially reported and the 2.1 percent pace in the first
three months. 

The measure is closely watched by Federal Reserve policy
makers and is within their forecast of 1.5 percent to 2
percent for the year. 

Adjusted for inflation, gross domestic product totaled
$10.8 trillion in the second quarter, measured at an annual
rate. Unadjusted, gross domestic product rose at a 6.1
percent annual rate, and totaled $11.6 trillion, after
rising at a 7.4 percent pace in the first quarter. 

The nation's deficit in goods and service reached $55.8
billion in June as companies imported more higher-priced
crude oil and as exports declined. For the second quarter,
the deficit widened to $588.7 billion, from the $552.8
billion the government initially estimated. It was $550.1
billion in the first three months of the year. 

Business fixed investment, which includes spending on
commercial construction as well as equipment and software,
grew at a 12.1 percent annual rate in the second quarter,
compared with the 8.9 percent rate initially reported and a
4.2 percent pace in the first quarter. 

http://www.nytimes.com/2004/08/28/business/28economy.html?ex=1094720452&ei=1&en=2b259ac1c14cec6d


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