U.S. economy grows slightly, still sluggish - East Valley Tribune: Business

U.S. economy grows slightly, still sluggish

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Posted: Friday, May 30, 2003 8:02 am | Updated: 1:54 pm, Thu Oct 6, 2011.

The American economy grew at a revised annual rate of 1.9 percent in the first quarter of 2003, up slightly from the previous quarter but still sluggish, the Commerce Department reported on Thursday.

Economists typically view a rate of about 3 percent as the benchmark for determining healthy growth in the American economy.

On the job front, new claims for unemployment benefits dropped last week by a seasonally adjusted 9,000, to 424,000, for the week ending Saturday.

Although that figure fell, it remains above 400,000 initial jobless claims, which economists associate with an anemic job market. In addition, the Labor Department said that the total number of jobless people collecting unemployment benefits leapt 83,000 to an 18-month high of 3.76 million for the week ending May 17.

The Commerce Department said the increase in the real gross domestic product — the nation’s output of goods and services — was driven by increases in personal consumption expenditures and residential investment.

Last month, the Commerce Department’s Bureau of Economic Analysis estimated a slightly lower rate for the first quarter of 1.6 percent. In the fourth quarter, real gross domestic product increased 1.4 percent.

About two-thirds of the economy is made up of consumer spending. As such, whenever American shoppers feel more comfortable spending money, it tends to give both the economy and the stock market a boost.

The stock market has been rising, although it was mixed Thursday afternoon, with the Dow Jones industrial average closing slightly down, while the Nasdaq composite index closed up.

The Commerce Department said that economic growth was tempered by ‘‘negative contributions from equipment and software and from private inventory investment.’’ But imports, which statisticians subtract from their calculation of the gross national product, decreased in the quarter.

The corporate outlook remains cloudy. Current production, a measure of corporate profits with inventories and capital consumption adjustments, rose a modest $7.9 billion in the quarter, slowing down from a rise of $25.1 billion in the fourth quarter.

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