MercoPress. South Atlantic News Agency

US economy expanded 4,4% in 2004

The United States economy expanded at a slower pace than expected in the last quarter of 2004, --3,1%--, down from 4% in the third quarter but still managed to end the year with an overall growth of 4,4%, the strongest since the 4,5% of 1999.

According to the US Commerce Department the fourth Q growth is the slowest expansion since the beginning of 2003, signalling weaker exports and consumer spending as well as an acceleration of inflation.

Analysts from Wall Street were expecting the US economy to expand 3,5% in Q4.

The US Commerce Department report indicates that goods and services exports dropped to their lowest growth rate in two years, while imports kept surging.

Consumer spending grew at a rate of 4,6% in the fourth quarter, compared with 5,1% in the third quarter. The biggest decline came in demand for durable goods, such as cars and refrigerators. Sales of consumer durables increased 6,7% in the fourth quarter, a significant drop form the 17,2% of Q3.

But consumer spending as a whole during 2004 rose by 3,8%, compared to 3,3% in 2003 and the biggest increase since 2000.

However inflation showed signs of renewed activity: personal consumer spending, which does not include food or energy, climbed to an annual rate of 1,&5 in the fourth quarter compared to 0,9% in the previous quarter.

The Federal Open Market Committee is scheduled to meet next January 31/February 1, when analysts forecast a further raise in the basic interest rate will be decided. Since last December 14 the rate for federal funds stands at 2,25% and another 25 basis points is predicted.