CNN/Money One for credit card only hard offer form at $9.95 One for risk-free form at $14.95 w/ $9.95 upsell  
News > Jobs & Economy
graphic
GDP growth revised lower
Broad measure of U.S. economic growth slashed to 3.9% from earlier 4.4% reading; inflation index up.
June 25, 2004: 5:30 PM EDT

NEW YORK (CNN/Money) - The nation's economic growth slowed to a 3.9 percent annual rate in the first quarter, a lower pace of growth than previously reported, the government said Friday.

The final reading of gross domestic product, which measures the value of all goods and services produced in the United States, had been expected to come in at a 4.4 percent annual growth rate, according to a survey of economists from Briefing.com. That would have been unchanged from the previous report on the period.

The final first-quarter growth rate is slower than the 4.1 percent gain posted for the fourth quarter. The slowing in the growth rate of the U.S. economy surprised many observers.

"We had expected a small braking, a minor tap on the pedal, from GDP growth but not a move down to a lower gear," said Robert Brusca, economist with FAO Economics.

This marked the second straight quarter that the final GDP reading is lower than the previous period, but some economists said the growth rate still shows strength in the U.S. economy.

"It's certainly lower than expectations so in that sense it was a disappointment, but the key thing is that this is still appreciably better as a growth rate than the long-term average, which is only about 3 percent," Patrick Fearon, economist with A.G. Edwards, told Reuters.

"We've now had three straight quarters of above-average growth, and that's nothing to sneeze at."

Correction
graphic
A key inflation gauge rose at a revised 2 percent annual rate in the first quarter; earlier versions reported it was up 2 percent from the prior quarter. We regret the error.

The core price index, which measures prices paid by consumers on items other than food and energy, rose at a 2 percent annual rate in the quarter, up from a 1.7 percent rate in the earlier reading. The measure is closely watched by the Federal Reserve for signs of inflationary pressure.

Investors have been looking closely at all inflation measures to get a reading on how fast the Fed will raise interest rates.

Fed policy-makers are widely expected to raise rates by a quarter of a percentage point at their Wednesday meeting, which will be the first increase by the central bank in four years.

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.

Still some economists said Friday's report was not a significant cause for concern, even if it reinforces the belief that the Fed will be raising rates to combat inflation.

"The core (inflation measure), while it's up, still looks very contained," said Anthony Chan, chief economist for Banc One Investment Advisors. "This just keeps the Federal Reserve interest rate hike engine humming along after June 30."

The Commerce Department said the lower first-quarter growth rate was due to a sharp increase in its reading on the value of imports -- which subtract from GDP -- and a downward revision to the amount consumers spent on bank services.  Top of page




  More on NEWS
JPMorgan dramatically slashes Tesla's stock price forecast
Greece is finally done with its epic bailout binge
Europe is preparing another crackdown on Big Tech
  TODAY'S TOP STORIES
7 things to know before the bell
SoftBank and Toyota want driverless cars to change the world
Aston Martin falls 5% in its London IPO




graphic graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.