- The Washington Times - Thursday, March 25, 2004


The U.S. economy ended 2003 on a good note, growing at a solid 4.1 percent annual rate, and is expected to do even better in the opening quarter of this year.

The latest reading on gross domestic product for the October-to-December quarter was the same as an estimate made a month ago, the Commerce Department reported yesterday. That was consistent with economists’ forecasts.

GDP measures the value of all goods and services produced within the United States and is considered the most important barometer of the economy.

Some analysts forecast economic growth in the January-to-March quarter to clock in at a rate of 4.5 percent. Growth in the April-to-June quarter also should be near that pace, analysts said.

Tax refunds and other tax incentives should motivate consumers and businesses to spend and invest, energizing the economy in the first half of this year, economists said.

“I think we should have another couple of good quarters,” said Mark Zandi, chief economist at Economy.com. “The only thing we can be hoping for now is some job growth.”

It is the second half of the year, though, that worries some economists.

If the lackluster job climate persists, some say, consumers might turn cautious, thus raising the risk of an economic slowdown in the final two quarters of the year.

The economy added just 21,000 jobs in February — all of them in government — a Labor Department survey of payrolls showed. Job growth has been painfully slow despite better economic activity.

Since President Bush took office in January 2001, the economy has lost 2.2 million jobs.

Sen. John Kerry of Massachusetts, the presumptive Democratic presidential nominee, has pointed to the employment statistics as evidence that Mr. Bush’s economic policies aren’t working. Mr. Bush, who has defended his policies, wants Congress to make his tax cuts permanent, contending that this will make the economy stronger and spur job growth.

In other economic news, new claims for unemployment benefits rose last week by a seasonally adjusted 1,000 to 339,000, the Labor Department said.

The National Association of Realtors reported that sales of previously owned homes grew by 2 percent in February to a seasonally adjusted annual rate of 6.12 million.

Low interest rates beckoned buyers and pushed home sales to record levels in 2003. Sales are expected to be brisk this year, too.

“With a strong underlying demand for housing from a growing population in a recovering economy, we could be flirting with another record this year,” said David Lereah, the association’s chief economist.

Although the fourth quarter’s GDP growth rate was slower than the red-hot 8.2 percent pace of the third quarter, the economy’s performance in the second half of 2003 marked the fastest back-to-back quarterly increases since the first two quarters of 1984.

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