GDP growth has slowed
Purchasing.com | April 28, 2005
The nation's economy grew at a slow 3.1% annual pace in the first quarter, according to a government report Thursday that was weaker than Wall Street forecasts. The Commerce Department's initial reading on the first quarter gross domestic product, the broad measure of the nation's economic activity, showed an annual pace of growth down from the 3.8% rise in the fourth quarter of 2004. The January-March reading is the slowest quarter since the 1.9 percent annual rate reported in the first quarter of 2003. Economists surveyed earlier by various news organizations had forecast growth ranging from a 3.4% to 3.6% annual pace.
The Commerce report also suggested that there was a pickup in prices in the first quarter. Prices paid for items excluding food and energy, an inflation measure closely watched by the Federal Reserve, was up 2.2% in the report, compared with a 1.7% rise in the fourth quarter, marking the steepest climb in that measure in a number of years. The GDP and inflations numbers, when together, raise the prospect of slower economic growth coupled with higher prices, the worst possible scenario for the economy in the view of many investors, especially with the Fed set to meet next week to consider interest rates.