WASHINGTON (AFX) - The U.S. economy slowed in the fourth quarter to a 1.4 pct annual rate from a 2.2 pct rate in the third quarter, the Commerce Department said.
This is the lowest quarterly growth rate since the second quarter of 1995.
The growth rate in the fourth quarter was weaker than expected. The consensus forecast of Wall Street economists was for GDP to rise 2.0 pct in the fourth quarter.
Economists are even more worried about the first quarter, where Federal Reserve board chairman Alan Greenspan said growth has slowed to "very close to zero".
For all of 2000, GDP grew at a 5.0 pct rate, compared with a 4.2 pct growth rate in the previous year. This is the strongest annual increase in GDP since 1984.
The deceleration in fourth quarter growth was led by reduced spending on goods, and weaker auto production. Final sales -- GDP growth minus inventory behavior -- grew 1.6 pct in the fourth quarter, down from a 2.4 pct rate in the third quarter.
Inflation accelerated in the fourth quarter, the government reported.
The GDP price index rose 2.1 pct down from a 1.6 pct rate in the third quarter. The core rate for the GDP price index rose 2.0 pct, following a 1.6 pct rise in the previous quarter. Excluding computers, the price index rose 2.2 pct, down from 1.8 pct rise in the previous quarter.
As measured by the PCE chain-type price index, inflation rose 2.2 pct in the fourth quarter, up from a 1.8 pct increase in the third quarter.
Excluding food and energy prices, the PCE price index rose 2.0 pct, up from a 1.1 pct rise in the third quarter.
This is the first estimate of GDP growth for the quarter. It will be revised twice before a final figure is reached. The first revision will be released on Feb 28.
The deceleration in fourth quarter growth reflected a downturn in spending for goods and an output slowdown in the auto sector, the Commerce Department said.
Excluding auto production, GDP increased 2.4 pct in the fourth quarter.
Consumer spending on goods and services decelerated to a 2.9 pct increase in the fourth quarter, following a 4.5 pct rise in the third quarter. This is the weakest rate of consumer spending since the second quarter of 1997.
Spending on durable goods fell 3.4 pct after a 7.6 pct gain in the third quarter.
Spending on non-durable goods rose 0.8 pct in the fourth quarter, down sharply from a 4.7 pct rise in the third quarter.
Only spending on services accelerated in the fourth quarter, rising 5.3 pct compared with a 3.7 pct rise in the third quarter. The personal saving rate was a record negative low of 0.8 pct in the fourth quarter compared with a negative 0.2 pct in the third quarter.
Business investment, as measured by non-residential fixed investment, fell 1.5 pct in the quarter, following a 7.7 pct gain in the third quarter.
This is the largest drop in business spending since the fourth quarter of 1991.
Software and computer equipment spending fell 4.7 pct in the fourth quarter, after an increase of 5.6 pct in the third quarter.
This is the largest decline since the first quarter of 1991. Government spending rose 2.9 pct after falling 1.4 pct in the third quarter.
The trade sector subtracted 0.56 percentage points from Q4 GDP growth, after lowering growth by 0.90 percentage points in the third quarter.
Imports rose 0.5 pct following a gain of 17.0 pct in the previous quarter.
Exports fell 4.3 pct after rising 13.9 pct in the third quarter. The real change in business inventories subtracted 0.18 percentage points from Q4 GDP growth.
Businesses increased inventories by 671.1 bln usd, compared with a rise of 72.5 bln in the third quarter.
The first estimate of GDP growth in the fourth quarter includes assumptions about the December trade deficit and other indicators. According to the department, the trade deficit is expected to narrow in December and inventories are expected to increase. gar/jjc/jmp