US owns up to slowdown
The world's largest economy last year experienced a much deeper and longer recession than previously thought, the US government disclosed last night, as it unveiled figures showing a sharp slowdown in the pace of growth this year.
Far from escaping relatively lightly from the bursting of the tech bubble, the US suffered three quarters of falling growth, according to revised figures released by the commerce department.
"It confirms that this recession in 2001 was not particularly mild or as short as some folks had thought," said economist Mark Vitner of Wachovia Securities in Charlotte, North Carolina. "We were expecting at least two negative quarters, and the fact we had three is a little bit of a surprise."
The commerce department now believes that the economy expanded by just 0.3% last year and by 3.8% in 2000, well down from its previous estimates of 1.2% and 4.1%.
Growth has slowed sharply this year from an annualised rate of 6.1% in the first quarter to just 1.1% in the most recent three months, a much weaker result than the market had been expecting.
The news sent shares on Wall Street into a fresh tailspin, with the market down 100 points in midday trading.
"The truth is, the economy is slowing and consumer spending is slowing," said Hugh Johnson, chief investment officer at First Albany Corp. "These numbers give me second thoughts about this economy... and where earnings are headed."
Adding to the gloomy picture, the US Federal Reserve said its latest snapshot of the economy showed that growth was "moderate" over the last few weeks.
"District reports suggest that the economy expanded modestly in recent weeks, with an uneven performance across sectors," the Fed said in its "beige book" report, an anecdotal summary of economic conditions across the central bank's 12 regions.
Analysts said the revised figures could prompt the Fed to lower its estimate of the economy's potential growth rate, which is bad news for investors as lower long-term growth will cut into corporate earnings and profits.
Far from escaping relatively lightly from the bursting of the tech bubble, the US suffered three quarters of falling growth, according to revised figures released by the commerce department.
"It confirms that this recession in 2001 was not particularly mild or as short as some folks had thought," said economist Mark Vitner of Wachovia Securities in Charlotte, North Carolina. "We were expecting at least two negative quarters, and the fact we had three is a little bit of a surprise."
The commerce department now believes that the economy expanded by just 0.3% last year and by 3.8% in 2000, well down from its previous estimates of 1.2% and 4.1%.
Growth has slowed sharply this year from an annualised rate of 6.1% in the first quarter to just 1.1% in the most recent three months, a much weaker result than the market had been expecting.
The news sent shares on Wall Street into a fresh tailspin, with the market down 100 points in midday trading.
"The truth is, the economy is slowing and consumer spending is slowing," said Hugh Johnson, chief investment officer at First Albany Corp. "These numbers give me second thoughts about this economy... and where earnings are headed."
Adding to the gloomy picture, the US Federal Reserve said its latest snapshot of the economy showed that growth was "moderate" over the last few weeks.
"District reports suggest that the economy expanded modestly in recent weeks, with an uneven performance across sectors," the Fed said in its "beige book" report, an anecdotal summary of economic conditions across the central bank's 12 regions.
Analysts said the revised figures could prompt the Fed to lower its estimate of the economy's potential growth rate, which is bad news for investors as lower long-term growth will cut into corporate earnings and profits.
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