GDP's defiance may signal end of recession

April 01, 2002 |

Although far from robust, the preliminary government report on the nation's overall level of economic activity during the final quarter of last year did show growth, albeit scant.

In contrast to the 1.3 percent decline in the nation's gross domestic product recorded in the third quarter of 2001, GDP expanded at a marginal 0.2 percent annual rate during the final three months of the year. Thus, the recession that officially began in March 2001 may be nearing an end sooner than most had dared hope following the economic and political fallout from the terrorist attacks.

The economy isn't out of the woods yet, however. GDP did contract during the second half of last year, and this downturn followed growth of less than 2 percent over the 12-month period prior to mid-2001. So, economic conditions are extremely fragile and the economy is vulnerable.

There have been many changes in the U.S. economy during that last year and a half. For the full-year 2001, overall economic activity grew after inflation-adjustment by a minute 1.1 percent, following four consecutive years when the nation's GDP expanded by more than 4 percent. The economy may still be in for another negative quarter or two before the recession ends. But, overall, it should be able to record slightly better growth this year — up 1.5 to 2 percent from 2001.

Recent trends in U.S. economic growth

Annual percent change in 2001, inflation-adjusted

Q1 Q2 Q3 Q4
Source: U.S. Department of Commerce
Gross domestic product 1.3 0.3 -1.3 0.2
Personal consumption spending 3.0 2.5 1.0 5.4
Durable goods 10.6 7.0 0.9 38.4
Nondurable goods 2.4 0.3 0.6 0.9
Business investment -0.2 -14.6 -8.5 -12.8
Equipment and software -4.1 -15.4 -8.8 -5.2
Buildings 12.3 -12.2 -7.5 -31.0
Government spending 5.3 5.0 0.3 9.2

Overlay Init