Washington, D.C., Feb. 27--The U.S. economy was a bit stronger in the final three months of 2003 than earlier projected as the government raised its estimates on spending by consumers and businesses.
Gross domestic product increased in October through December at a 4.1% annual rate, half its blistering 8.2% pace in the third quarter, the Commerce Department said Friday.
In its original estimate a month ago, the government said GDP grew 4.0% during the fourth quarter. The fresh projection was bigger than expectations on Wall Street. A Dow Jones-CNBC survey of 19 economists forecast revised GDP growth of 3.7%.
"The major contributors to the increase in real GDP in the fourth quarter were personal consumption expenditures, exports, equipment and software, private inventory investment, and residential fixed investment," the Commerce Department said.
In all of 2003, the economy grew 3.1%, its best rate since 2000's 3.7%. It advanced 2.2% in 2002 and 0.5% in 2001.
Analysts expect solid growth in 2004. The National Association for Business Economics last week said its forecasters hiked an estimate on the economy and predicted 4.6% expansion this year, up from a prior 4.5% projection.
The panel also feels the outlook will improve for the job market, which has been sluggish with the economy's climb.
GDP is a measure of all the goods and services produced in the U.S. A key component of GDP is consumer spending, which accounts for about two-thirds of economic activity.
Spending by consumers rose at a 2.7% annual rate in 2003's fourth quarter. The government originally reported fourth-quarter outlays increased 2.6%. Third-quarter spending rose 6.9%.
Consumers' spending on durable goods, meant to last at least three years such as cars, slipped 0.1%, revised down from a previously reported 0.9% rise. Third-quarter durable goods spending climbed 28.0%. Fourth-quarter spending on non-durables rose by 5.2%, revised up from a previously estimated 4.4% increase.
Business spending advanced by 9.6%. Outlays were revised up from a previously estimated 6.9% increase. Equipment and software spending climbed at 15.1%, but non-residential structures went down 7.1%. Overall business spending rose 12.8% in the third quarter.
Businesses elevated inventories by $14.9 billion, revised up from an originally estimated $6.1 billion increase. The change in inventories added 0.92 of a percentage point to GDP growth. In the third quarter, businesses reduced inventories by $9.1 billion.
Real final sales of domestic product -- that is, GDP less the change in private inventories -- rose at a 3.2% annual rate. That figure was revised down from the originally reported 3.4% advance. Third-quarter real final sales climbed at a 8.3% annual rate.
Exports increased 21.0% in the fourth quarter, which was the largest increase since the fourth quarter of 1996. Imports advanced by 16.4%. Commerce originally reported exports rose 19.1% and imports went up 11.3% Third-quarter exports went up by 9.9% and imports rose 0.8%.
Federal government spending increased by 1.6%, revised up from an earlier estimated 0.7% advance. Federal outlays rose 1.2% in the third quarter.
State and local government spending climbed 0.4% in the fourth quarter, revised down from a previously reported 0.9% increase.
The government report showed inflation edged up in October through December a bit more than first thought. The price index for gross domestic purchases rose at a 1.1% rate; it was first estimated as climbing 1.0%. The index advanced 1.8% in the third quarter. The government's price index for personal consumption went up at a 0.7% rate during the fourth quarter; the original estimate had the gauge rising 0.6%. The PCE index climbed 1.8% in the third quarter.
