GDP Growth Weak in Fourth Quarter 2002

The latest economic figures coming out of the U.S. Department of Commerce suggest that the current economic weakness is an extension of the weak figures seen all throughout last year.

The nation's total output of goods and services increased at an annual rate of 1.4% during the fourth quarter of last year, a much weaker performance than the 4% increase seen during the third quarter. The fourth quarter proved to be the second-weakest of the year, providing further evidence that an economic turnaround may not be happening as soon as expected.

Consumer spending was less than half of what it was in the third quarter of 2002, the largest decrease being realized in the durable goods sector. This decrease can be attributed mainly to the huge boost in automotive sales seen in the third quarter after domestic car and truck manufacturers decided to sweeten the pot and offer 0% financing incentives. In Q3, automobile sales were up an unbelievable 38.5%, while in the fourth quarter they were down 25.1%.

Consumer spending on nondurable goods hovered around 1%, while federal, state, and local government spending came in at less than 1% for the quarter. Despite the strong start of 2002 with first-quarter growth of 5%, the year ended with smaller gains and less consumer confidence.