The U.S. economy in the last three months of 2002 grew at twice the rate that was initially reported. The 1.4 percent fourth quarter gross domestic product number failed to spur a rally in financial markets.
A month ago, the Commerce Department in its preliminary report said the economy had expanded at an annual rate of .7 percent in the October to December period. Now, with more complete data, growth has been revised up to 1.4 percent. The main reason for the revision was a faster rebuilding of business inventories and increased consumer spending. There will be one more future revision of the fourth quarter GDP.
For all of 2002 the giant U.S. economy expanded by 2.4 percent, bringing total gross domestic product to $9.5 trillion. In the recession year of 2001, U.S. growth was a mere .3 percent.
But while the economy may be performing better than some had thought the outlook is clouded. Consumer confidence is at a nine year low, the stock market remains depressed with the bear market now in its fourth year, and higher oil prices and the threat of war with Iraq are holding back economic activity.
The Bush administration is predicting 3 to 4 percent economic growth this year. But few economists in the private sector are that optimistic. Some even predict a renewed slide into recession, which is defined as two consecutive quarters of negative growth.
Alan Greenspan, head of the independent central bank, noted earlier this year that three of the four most recent U.S. downturns have been triggered by higher oil prices. Crude oil is trading at a 12 year high of nearly $40 a barrel. The last time oil reached that price was 1991 when the U.S. was in the early stages of nine month long recession.