U.S. growth slows
<font size=5>GDP 2Q rates falls to 0.7%, lower than expected, as slowdown continues</font>
July 27, 2001: 9:39 a.m. ET (=15:39 Uhr MEZ)
NEW YORK (CNNfn) - <font color="#FF0000">The pace of U.S. economic growth slowed in the second quarter, the government said Friday, as businesses drastically cut spending and a long period of malaise in the world's largest economy continued</font>.
U.S. gross domestic product (GDP) -- the broadest measure of the nation's economy - <font color="#FF0000">grew at a 0.7 percent annual rate in the second quarter</font>, the Commerce Department reported, a number that will be revised in later reports. Economists surveyed by Briefing.com expected a 0.9 percent growth rate in the second quarter.
"Basically [the number] showed <font color="#FF0000">the economy was weaker in the second quarter, weaker than expected</font>, but the good news is that it did not come in negative," said Peter Cardillo, director of research at Westfalia Investments.
<font color="#FF0000">It was the worst GDP reading since a 0.1-percent contraction in the first quarter of 1993</font>. It was lower than the revised 1.3-percent growth rate in the first quarter <font color="#FF0000">and much lower than the revised 5.7-percent growth rate of a year earlier</font>.
Eigener Kommentar: 5,7% vor einem Jahr, 0,7% jetzt - Ein herber Wachstumseinbruch!!!
Based on new methodology, the government also cut its figure for full-year 2000 GDP to 4.1 percent from 5.0 percent, 1999 GDP to 4.1 percent from 4.2 percent, and 1998 GDP to 4.3 percent from 4.4 percent.
U.S. stocks opened slightly lower following the report. U.S. Treasury bond prices rose, driving interest yields lower, as investors bet the Fed may cut rates yet again to try to spur the economy.
<font color="#FF0000">Fed likely to cut again</font>
The Federal Reserve has cut its target for <font color="#FF0000">short-term interest rates six times this year, from 6.5 percent to 3.75 percent</font>, in an effort to boost growth and ward off a recession, defined as two consecutive quarters of GDP contraction.
<font color="#FF0000">Economists thought Friday's GDP data practically guaranteed another Fed move at its next meeting, scheduled for Aug. 21</font>.
"There is nothing to stand in the way of a Fed rate cut of [a quarter percentage point] in August," said John Herrmann, chief U.S. economist at IDEAglobal.com.
Consumer spending, which makes up two-thirds of the U.S. economy and has kept it afloat during a drastic slowdown in business spending, eased to a 2.1 percent growth rate, compared with 3 percent in the first quarter.
<font color="#FF0000">But capital spending fell a whopping 13.6 percent, compared with a drop of 0.2 percent in the first quarter</font>. <font color="#FF0000">It was the steepest reduction in business spending since the spring of 1982</font>, when the country was bogged down in the worst recession of the post-World War II period.
The Fed would have room to cut rates further because inflationary pressures have begun to abate as the economy has endured the yearlong slowdown.
A key inflation gauge tied to the GDP rose at a rate of just 1.7 percent in the second quarter, down from a 3.2 percent rate in the first quarter, and the best showing since early 1999.
Quelle: http://www.cnnfn.com
http://cnnfn.cnn.com/2001/07/27/economy/economy/
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