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		Economic Expansion Slows Friday January 30, 12:03 pm ET By Glenn Somerville WASHINGTON (Reuters) - U.S. economic growth slowed to a 4 percent annual rate in the closing three months of 2003, less than half the third-quarter pace as consumers curbed their spending, the Commerce Department reported on Friday. Still, other reports showed consumer hopes remained buoyant because of low interest rates and a surging stock market as Bush administration officials moved swiftly to claim the economy was healthy ahead of November presidential elections. The fourth-quarter expansion in gross domestic caught markets by surprise because it was well below Wall Street economists' forecasts for a 4.8 percent rate of increase and far below a sizzling 8.2 percent increase posted in the third quarter when tax-induced spending was strong. The weaker-than-expected GDP figures spurred a sharp rise in U.S. Treasury prices while the dollar initially weakened after the report was issued as investors weighed whether U.S. economic activity might not be as vigorous as thought. Analysts noted the fourth-quarter performance was above the economy's long-term sustainable rate of 3 percent but was likely to raise questions whether consumers, whose spending has led the recovery from the 2001 recession, might be flagging. PUSHING BUOYANT OUTLOOK U.S. Treasury Secretary John Snow issued a statement showing the GDP data "demonstrates that a good recovery is under way" but said more needed to be done to boost job creation. "We are seeing good economic news on many fronts and we are encouraged, but we are not satisfied." At the White House, where President Bush was meeting a group of private economists, spokesman Scott McClellan also highlighted the concern on employment. "There is more that we need to do to create a more robust situation for job creation," McClellan said. Some 2.3 million non-farm jobs have been lost since the Bush administration took office, and Capitol Hill Democrats highlighted the loss after the GDP report was issued. "President Bush has been quick to take credit for the economic growth," said Rep. Pete Stark from California and the senior Democrat on the Joint Economic Committee. "But he has yet to take responsibility for the nation's 8.4 million unemployed." Analysts noted that consumer spending, though less robust in the fourth quarter than in the third, still was growing. "The big issue for 2004 is whether well-above average growth is sustainable," said economist Ken Mayland of ClearView Economics LLC in Pepper Pike, Ohio. "The fourth-quarter figure provides an object lesson," Mayland added, "The baton has been passed on to other sectors like manufacturing, inventory rebuilding and exporting with moderate but solid consumer spending." A report at mid-morning showing consumer confidence remained upbeat in January helped steady the dollar and added to an impression that the expansion remained well-grounded. CONFIDENCE ON RISE The University of Michigan's consumer confidence index rose to a final reading of 103.8 in January from December's 92.6, according to market sources who saw the data, which is issued only to paying subscribers. Separately, the national Association of Purchasing Management said its barometer of business activity in the Midwest ticked up in January for a ninth straight month -- another indicator that expansion rolled solidly into 2004. Its business barometer climbed to 65.9 from 61.2 in December, with any reading over 50 indicating expansion in manufacturing. The Commerce Department said consumer spending, which accounts for two-thirds of gross domestic product, rose at a 2.6 percent pace in the fourth quarter, a sharp slowdown from the heady, tax-cut induced 6.9 percent gain of the prior three months. Growth in business spending and residential investment also slowed, it said. Exports of goods and services jumped 19.1 percent in the fourth quarter, nearly twice the third-quarter's increase, as a weaker dollar helped make U.S.-produced exports cheaper. Gross domestic product, after adjustment for inflation, expanded 3.1 percent last year, up from 2.2 percent in 2002, for the best performance since 3.7 percent in 2000. Inflation was muted last year, according to the GDP report. A closely watched index, which measures consumer prices without energy and food, rose at an annual rate of only 0.7 percent in the fourth quarter, the lowest quarterly rise since 1962.   Back to Original Article: Mortgage News You Can Use   Continue with: G7 positions on dollar ahead of Florida meeting U.S. Economy Grew at Slower-Than-Forecast 4 Percent Rate in Fourth Quarter Economy Grows at 4% Rate in Final Quarter of 2003 Economic Growth Report Pulls Down Dow 32 Treasuries Slip on Strong Chicago PMI Dollar Falls on Lower-Than-Expected GDP Fed, economists see improvement Hire expectations Dollar Firms, Buoyed by Economic Data Part One Dollar Firms, Buoyed by Economic Data Part Two Treasuries Up as Growth Falls Short Treasuries Up as Growth Falls Short part two
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