The slender pace of US growth was unrevised in the fourth quarter and new jobless claims jumped sharply last week, government data shows today, reinforcing a fragile outlook that some fear spells recession.
Gross domestic product, which measures total goods and service output within US borders, rose at an annual rate of 0.6%. It was slowed by a collapse in spending on new homes and a slump in inventories, and was slightly weaker than the 0.7% pace forecast by analysts.
It was the Commerce Department's second of three readings for fourth-quarter GDP and compared with 4.9% in the previous three months. GDP grew 2.2% for all of last year, the slowest since 2002, the department said.
A separate release from the Labour Department showed that the number of US workers applying for first-time unemployment benefits rose a much bigger than expected 19,000 last week. Imports were lower in the fourth quarter, but this was offset by a $10.1 billion drop in private inventories, versus a $3.4 billion decline initially reported.
Residential investment crashed 25.2% in the steepest fall since 1981. Housing market woes that sparked a global credit crunch have forced the Federal Reserve to aggressively cut interest rates by 225 basis points since mid-September.
Fed Chairman Ben Bernanke warned yesterday that the economy remained at risk, but he also cautioned that inflation had risen and was being watched closely by the central bank.
The personal consumption expenditures price index excluding food and energy - the Fed's favored inflation gauge - was unrevised, rising at an 2.7% annual rate in the fourth quarter, matching forecasts and following a 2% rise in the previous three months.
Consumer spending, which accounts for more than two-thirds of US growth, rose at a revised annual pace of 1.9% versus a previous estimate of a 2% gain.
Meanwhile, first-time jobless claims increased to a seasonally adjusted 373,000 last week from a revised 354,000 the prior week. That was much higher than the 350,000 claims economists polled ahead of the report were expecting after an initially reported 349,000 the prior week. A Labour Department official said there were no special factors behind the increase.
In more signs of a weakened labor market, the number of workers remaining on jobless benefits rose to 2.81 million in the week ended February 16, the most recent week these data were available. That was the highest since October 2005 in the aftermath of Hurricane Katrina.
