U.S. Consumers’ Spending Increases Bringing Economy Out of RecessionBy Warren Vieth
LOS ANGELES TIMES -- washington
Americans are spending their way out of the recession, the government said Thursday as it released figures showing the economy expanded at a 1.4 percent rate during the fourth quarter of 2001.
The revised growth estimate, up from last month’s initial reading of 0.2 percent, was higher than most economists had predicted, and provided more evidence that a recovery already may be under way.
The economy’s ability to bounce back from Sept. 11 and resume its growth after only one quarter of contraction is attributable largely to a surge in consumer spending, particularly on durable goods such as automobiles and appliances.
“Where’s the recession?” quipped Joseph LaVorgna, senior economist with Deutsche Banc Alex. Brown in New York. “It’s pretty remarkable. We really had what appears now to be a very shallow recession.”
The Commerce Department said gross domestic product, the broadest measure of the nation’s economic output, reached a record $10.3 trillion during the final three months of 2001.
The 1.4 percent gain followed a 1.3 percent decline in the third quarter, the first GDP contraction in nearly a decade.
The fourth-quarter figures will feed a continuing debate over the length and depth of the downturn. The popular definition of a recession is two consecutive quarters of economic contraction, and it appears the latest slowdown was confined to one quarter.
But the National Bureau of Economic Research, the official scorekeeper of U.S. business cycles, does not use GDP figures to define recessions. Instead, it looks at four monthly indicators of economic performance: employment, real income, industrial production and wholesale-retail trade.
According to the research group, the recent recession began in March 2001, when U.S. employment began declining from a peak of 132.7 million. The official end point will be whenever the group says it is, and the group might not make that decision for months. (In most cases, the downturns it designates as recessions coincide with two consecutive quarters of GDP shrinkage. But not always: The recession of 1960-61 was another exception.)
A series of economic shocks, some dating back to early 2000, contributed to last year’s slump: higher energy prices, dot-com disillusionment, stock market losses, business investment cutbacks, inventory liquidation, manufacturing layoffs, tech industry failures and, finally, the Sept. 11 attacks.
The downside of a mild recession is the probability of a subdued recovery, as Federal Reserve Chairman Alan Greenspan cautioned Congress this week.