2001 Likely To Look More Like Late 2000

Growth in real (i.e. inflation-adjusted) GDP slowed to an annual rate of just 1.1% during the final quarter of last year, according to preliminary estimates from the U.S. Commerce Department. Final revisions for the third quarter of 2000 pegged GDP gains at a 2.2% annual rate, not the 2.7% rate originally estimated.

Low points in the latest GDP report were numerous. Consumer spending (two-thirds of all U.S. economic activity) growth slowed to an annualized rate of 2.8% during Q4 2000. Spending for durable consumer goods (like appliances and cars) actually declined during the final quarter of last year after averaging double-digit growth over the previous three years. Spending for residential construction (including remodeling projects) also fell during the final months of 2000 after registering an even steeper decline during the third quarter.

Of even greater immediate significance for the business community were the surprising absolute declines recorded in business investment spending and export sales. Although investment in buildings continued to grow at a healthy rate through the final months of 2000, spending for new equipment (everything from trucks to printing presses) plummeted. Business spending has increased at a double-digit annual rate averaging 12.7% for every year from 1993 through 2000, so such a dramatic late-year plunge in this driver of economic growth has to be of real concern.

This material is specially compiled for Graphic Arts Monthly by Delano Data Insights, which provides economic analysis and forecasts via newsletters and reports covering a variety of industry sectors. For more information, contact Daryl Delano, 30 Flintlocke Drive, Plymouth, Mass. 02360, telephone (508) 746-7180.