Right on the brink of admitting this is still recession
The fourth quarter produced economic growth of just 0.7 percent. This is, of course, the same number that, for the two quarters of 2001, the Department of Commerce revised downward in the middle of 2002 to acknowledge we'd been in a recession. Consumer spending growth slowed to one percent and that slowdown came in the big-ticket items, which were down 7.3 percent in the fourth quarter.
The Fed, which kept rates level (how much lower can they go at 1.25 percent, anyway?), is paralyzed and hoping against hope that they won't be called on to "stimulate" the economy with easier money. By now, Chairman Greenspan and team had thought they'd be wrestling inflation, but that's no a problem with global deflationary pressures make everything less expensive.
The good news was that companies are increasing spending on computer equipment and software. This figure was 1.5 percent annualized during the fourth quarter. Tech will lead the rest of the economy out of this mess. It won't necessarily pull the rest of the economy along, because IT spending is significantly constrained compared to the mid-1990s, when business and, especially, small and medium-sized business were in the midst of their first build-out of computer systems.
Posted by Mitch Ratcliffe at January 30, 2003 09:39 AM | TrackBack