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Articles: US economic growth is downgraded

Posted by admin on Friday, June 25, 2004 - 06:32 AM

The US economy grew much slower than originally thought in the first quarter of 2004, a government report has shown.
US GDP growth for the period from 1 January to 31 March has now been downgraded by the Commerce Department from an original 4.4% to 3.9%. This is below the 4.1% reported for the last quarter of 2004, and comes as a surprise for analysts who had expected the figure to remain at 4.4%. The Commerce Department at the same time revised up its inflation figures. Rates to rise? It now says the core price index for consumer spending - a central inflation measurement that cuts out volatile food and energy prices - rose by 2% in the quarter, up from 1.7% a month ago. This is likely to fuel already high speculation that the Federal Reserve will have to start to raise interest rates in order to dampen inflationary pressures. The core rate has been at a 46-year 1% low for the past 12 months. The downward revision in the economic growth figures was blamed on higher than previously estimated imports, and a reduction in the amount US consumers spent on bank services during the period. Both the fall in economic growth and the increase in the inflation figure will come as bad news for a President George W Bush facing a re-election battle in the autumn.

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