Saturday, May 26, 2001

Economy barely budged

Lack of growth confirms fears about recovery

The Associated Press

        WASHINGTON — The U.S. economy limped along in the first three months of the year at a pace much slower than the government previously thought.

        The biggest drag on growth came from companies struggling to get rid of their unsold goods.

        Gross domestic product — the country's total output of goods and services — grew at an annual rate of just 1.3 percent from January to March, the Commerce Department reported Friday.

        The latest GDP was much lower than the government's estimate one month ago that the economy had expanded at a rate of 2 percent in the first quarter.

        The lower estimate came one day after Federal Reserve Chairman Alan Greenspan said the worst might not be over. He signaled that the Fed, which has slashed interest rates five times this year, might order more cuts.

        The report “does buttress the concerns that have been expressed by Mr. Greenspan ... that economic weakness remains the greatest risk,” said Joel Naroff of Naroff Economic Advisors.

        The first-quarter rate came after an anemic 1 percent showing in the fourth quarter of 2000. Some economists project the economy will grow at a similar low rate this quarter, while others believe it will slow down even further because of sluggish consumer and business spending.

        “The economy is still stuck in the slow lane,” said Stuart Hoffman of PNC Financial Services Group.

        In another report Friday, orders to U.S. factories for costly manufactured goods expected to last at least three years, such as cars, plunged in April by 5 percent, the largest drop since January. Demand fell sharply for transportation equipment, computers and semiconductors.


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