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Thursday, April 28, 2005

Very slow GDP growth

The Commerce Department's initial reading on the first quarter gross domestic product, the broadest measure of the nation's economic activity, showed an annual pace of growth of 3.1 percent, down from the 3.8 percent rise in the fourth quarter of 2004.
It was the slowest quarter since the 1.9 percent annual rate reported in the first quarter of 2003.
Economists surveyed by Briefing.com had forecast growth at a 3.5 percent annual pace.
Prices paid by individuals for items excluding food and energy, an inflation measure closely watched by the Federal Reserve, was up 2.2 percent in the report, compared with a 1.7 percent rise in the fourth quarter, marking the steepest climb in that measure since the fourth quarter of 2001. Other closely-watched price measures in the report also showed increasing inflation.
The report therefore raises the prospect of slower economic growth coupled with higher prices, a situation known as "stagflation" which is the worst possible scenario for the economy in the view of many investors.

1 Comments:

  • Growth of three percent or more is pretty good, so a slow down from 3.8% to 3.1% isn't too much of a concern.

    There's a differnce in the inflation caused by higher oil prices and those caused by increased demand for goods and services.

    By Blogger John Topoleski, at 11:47 AM  

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