Friday, June 28, 2002
Economic recovery zooms, then stalls
By Jeannine Aversa
The Associated Press
WASHINGTON The economic recovery started off the year with a bang, but it has lost some pep since then, economists said.
Gross domestic product the total output of goods and services produced within the United States grew at a red-hot annual rate of 6.1 percent in January-March, the strongest performance in more than two years, the Commerce Department reported Thursday.
Economists think that GDP has slowed considerably in the current quarter, with some projecting growth at a rate of just 2.5 percent or lower. The slowdown partly reflects less enthusiastic consumers, whose spending accounts for two-thirds of all economic activity in the United States, analysts said.
Americans' confidence in the economy fell in June to a four-month low, pulled down by accounting scandals and worries about jobs.
When it comes to spending, I think consumers are going to have a more wait-and-see attitude, said Tim O'Neill, chief economist at Bank of Montreal.
Private economists expressed concerns that fallout from the latest accounting scandal, involving telecommunications giant WorldCom, could not only jolt confidence but also chill consumers' willingness to spend. It also could make companies even more wary of making big commitments, including capital investments and hiring.
But Kathleen Cooper, Commerce undersecretary for economic affairs, was more optimistic. I really do expect that as we move through the second half of this year, we'll be feeling much better about this economy, she said.
Some private economists think that the economy might average a moderate growth rate of around 3 percent to 3.5 percent in the second half of the year.
The latest reading on GDP showed the economy grew more briskly during the first quarter than previously thought. The government initially estimated that GDP for the period grew at a 5.8 percent pace and then revised that to 5.6 percent growth rate a month ago before it popped back up to 6.1 percent Thursday.
The 6.1 percent growth rate for first quarter GDP was the strongest since the fourth quarter of 1999, when GDP rose at a 8.3 percent rate.
WorldCom clobbers state pension funds
WorldCom execs subpoenaed
Firstar is changing name, again
Peoples asks judge to release home liens
Economic recovery zooms, then stalls
Kmart's new boss thanks faithful
New scandal keeps heat turned up on Andersen
F&W to purchase Krause
Toyota's North American president returning to Japan
Business Digest
Industry notes: Manufacturing
Tristate Summary
Morning Memo
What's the Buzz?