4th Q GDP: Strong & Disappointing

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Source: NYT

A perfect example of why expectations matter, and what happens when they get ahead of themselves.

“Though the growth remained strong, it was weaker than many economists had been predicting. The pace also raised doubts about whether job creation will increase rapidly enough to reduce the numbers of unemployed significantly by the time President Bush faces re-election in November.

Economists had already expected growth to slow mightily in comparison with the stunning rate of 8.2 percent in the third quarter of last year. But many forecasters had been predicting that growth would hit an annual rate of 5 percent in the fourth quarter and remain well above 4 percent for the rest of this year.

After scrutinizing the latest data, many analysts predicted that the most important indicators of future growth still pointed to a strong year. Consumer spending and business investment continued to grow — though not as fast as in the previous three months — and exports soared by 19.1 percent.”

Economy Remained Strong in 4th Quarter, U.S. Says
NYTimes, January 31, 2004

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