Economy grew faster than thought - East Valley Tribune: Business

Economy grew faster than thought

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Posted: Saturday, February 26, 2005 5:35 am | Updated: 7:54 am, Fri Oct 7, 2011.

WASHINGTON - The economy clocked in at a 3.8 percent pace in the final quarter of 2004 — faster than initially thought — and is now cruising at that speed or better.

That could be good news for jobless people hoping for companies to increase hiring.

In the newest reading on the economy’s fitness, the gross domestic product exceeded a previous estimate of a 3.1 percent annual growth rate for the October-to-December quarter, the Commerce Department reported Friday. GDP measures the value of all goods and services produced within the United States.

The improvement reflected more robust spending by businesses on capital equipment and on inventories of goods.

The trade deficit also was less of a drag on fourthquarter growth than initially thought.

Although economic growth in the final quarter of last year was a bit slower than the third quarters’ 4 percent, the performance was still solid.

‘‘We are now at a comfortable cruising altitude,’’ said Lynn Reaser, chief economist at Banc of America Capital Management. ‘‘What is significant is that all parts of the economy were pulling their own weight.’’

In other news, sales of previously owned homes slipped 0.1 percent in January from the previous month to a seasonally adjusted annual rate of 6.80 million units, the National Association of Realtors reported.

Even with the dip, sales remained healthy, analysts said. For the current Januaryto-March quarter, the economy is expected to grow at a rate of around 4 percent, some economists project.

Analysts are hoping that with the economy moving ahead at a good pace, companies will feel more inclined to step up hiring in upcoming months. Economists predict the nation’s payrolls will expand by a sizable 225,000 in February, which would be up from January’s 146,000 gain.

‘‘With decent momentum entering the New Year, we should soon be generating the kind of job growth that will make the expansion feel like good times,’’ said Bill Cheney, chief economist at John Hancock Financial Services.

The jobs market was slower to recover from the 2001 recession than other parts of the economy, a source of frustration to jobseekers.

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