Cautious Consumers Slow Economic Growth

GDP Grows Less-Than-Expected 4 Percent

Jan. 30, 2004

WASHINGTON (Reuters) - The U.S. economy grew at a solid 4 percent annual rate in the final three months of last year, the government reported on Friday, but the pace was weaker than expected and less than half the rate of the third quarter as consumers turned more cautious on spending.

The Commerce Department said consumer spending, which accounts for two-thirds of overall gross domestic product, rose at a 2.6 percent pace in the fourth quarter, a sharp slowdown from the heady, tax-cut induced 6.9 percent gain of the prior three months.

Growth in business spending and residential investment also slowed, it said.

While the 4 percent GDP gain last quarter was relatively healthy by historical standards, it was less than the 4.8 percent gain expected by economists, and far below the sizzling 8.2 percent rate of increase reported in the third quarter.

Gross domestic product, after adjustment for inflation, expanded 3.1 percent last year, up from 2.2 percent in 2002, for the best performance since 3.7 percent in 2000.

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