BUSINESS SITUATION.

Larkins, Daniel ; Moran, Larry R. ; Morris, Ralph W. 等

THE pace of economic activity slowed again in the fourth quarter of 2000, according to the "advance" estimates of the national income and product accounts (NIPA's).

* Real gross domestic product (GDP)--a measure of domestic production of goods and services--increased 1.4 percent after increasing 2.2 percent in the third quarter and 5.6 percent in the second (table 1 and chart 1).(1)

[Chart 1 OMITTED]

[TABULAR DATA 1 NOT REPRODUCIBLE IN ASCII]

* Gross domestic purchases--a measure of domestic demand for goods and services regardless of where they were produced--increased 1.9 percent after increasing 3.0 percent in the third quarter and 6.5 percent in the second.

* Growth of real disposable personal income also slowed, to 0.5 percent from 2.6 percent in the third quarter and 3.7 percent in the second; Federal farm subsidies boosted income growth in the third quarter and reduced it in the fourth.

Inflation remained moderate. The price index for gross domestic purchases increased 1.9 percent in the fourth quarter, about the same as in the two preceding quarters.

The smaller fourth-quarter increase in domestic production than in domestic demand mainly reflected a decrease in exports; a small increase in imports also played a role.(2)

The increase in domestic demand reflected increases in consumer spending (mainly for services) and government spending (table 2). These increases were partly offset by decreases in nonresidential fixed investment, private inventory investment, and residential investment.(3)

Table 2.--Contributions to Percent Change in Real Gross Domestic Product

[Quarterly estimates seasonally adjusted at annual rates]

 2000

 1999 2000 I II III IV

Percent change at
annual rate:
 Gross domestic
 product 4.2 5.0 4.8 5.6 2.2 1.4

Percentage points at
annual rates:
 Personal
 consumption
 expenditures 3.52 3.57 5.03 2.14 2.99 1.92
 Durable goods .96 .77 1.79 -.42 .61 -.28
 Nondurable goods 1.10 1.00 1.19 .74 .93 .16
 Services 1.46 1.79 2.04 1.83 1.46 2.04

Gross private
domestic investment 1.15 1.82 .92 3.66 .33 -.49
 Fixed investment 1.53 1.58 2.68 1.93 .55 -.30
 Nonresidential 1.26 1.60 2.54 1.87 1.02 -.20
 Structures -.05 .28 .63 .14 .44 .30
 Equipment and
 software 1.30 1.32 1.91 1.73 .58 -.50
 Residential .27 -0.02 .14 .06 -.47 -.10
 Change in private
 inventories -.37 .24 -1.76 1.73 -.22 -.18

Net exports of goods
and services -1.03 -.87 -.94 -1.00 -.90 -.56
 Exports .32 .98 .67 1.48 1.45 -.49
 Goods .30 .89 .46 1.37 1.54 -.50
 Services .02 .09 .21 .11 -.09 .01
 Imports -1.35 -1.85 -1.61 -2.48 -2.35 -.07
 Goods -1.32 -1.60 -1.28 -2.26 -1.90 .05
 Services -.04 -.24 -.33 -.22 -.44 -.13

Government
consumption
expenditures and
gross investment .59 .50 -.18 .85 .24 .50
 Federal .16 .09 -.93 .97 -.57 .27
 National defense .08 .01 -.86 .60 -.38 .37
 Nondefense .08 .08 -.07 .37 -.18 -.10
 State and local .43 .40 .75 -.12 .33 .24

NOTE.--More detailed contributions to percent change in real gross domestic product are shown in NIPA table 8.2. Contributions to percent change in major components of real gross domestic product are shown in tables 8.3 through 8.6.

The fourth-quarter deceleration in domestic demand, to 1.9 percent from 3.0 percent, reflected downturns in nonresidential investment and consumer spending for goods. These drags on demand growth were partly offset by an upturn in Federal Government spending and a step-up in consumer spending for services.

Motor vehicles.--Real motor vehicle output decreased 24.4 percent in the fourth quarter after decreasing 16.9 percent in the third (table 3).(4) Auto output decreased for the fourth consecutive quarter, and truck output decreased for the second consecutive quarter. Final sales of motor vehicles to domestic purchasers decreased after increasing slightly.

[TABULAR DATA 3 NOT REPRODUCIBLE IN ASCII]

Purchases of motor vehicles by consumers decreased 15.0 percent. Several factors were less favorable to consumer spending than in the third quarter, including the slowdown in real income and a drop in consumer confidence (as measured by the Index of Consumer Sentiment prepared by the University of Michigan's Survey Research Center) to its lowest level in 2 years. The unemployment rate remained low, at 4.0 percent.

Motor-vehicle prices decreased as manufacturers responded to weakening consumer sales by extending rebates and below-market financing to a broader selection of auto and truck models. Interest rates on new-car loans made by commercial banks changed little.

Purchases of motor vehicles by businesses decreased considerably more than in the third quarter.

Imports of motor vehicles decreased after increasing substantially. Exports decreased less than in the third quarter.

Motor vehicles inventories increased in the fourth quarter. The increase reflected a swing from liquidation to accumulation in truck inventories; accumulation of auto inventories slowed. The inventory-sales ratio for new domestic autos, which is calculated from units data, increased to 2.9 at the end of the fourth quarter from 2.5 at the end of the third; the traditional industry target is 2.4.

Prices

The price index for gross domestic purchases increased 1.9 percent in the fourth quarter, about the same as in the third (table 4). Prices of gross domestic purchases less food and energy increased 1.6 percent, also about the same as in the third quarter (chart 2).

[Chart 2 OMITTED]

Table 4.--Price Indexes

[Percent change at annual rates; quarterly estimates based on seasonally adjusted index numbers (1996=100)]

 2000

 1999 2000 I II III IV

Gross domestic 1.5 2.1 3.3 2.4 1.6 2.1
product

Less: Exports of
goods and services -.4 1.7 1.9 1.9 .7 .6

Plus: Imports of
goods and services .6 4.0 5.6 .2 3.8 -.1

Equals: Gross
domestic purchases 1.6 2.4 3.8 2.1 2.0 1.9

Less: Change in
private
inventories ... ... ... ... ... ...

Equals: Final
males to domestic
purchasers 1.6 2.4 3.8 2.1 2.0 1.9

Personal
consumption
expenditures 1.8 2.4 3.5 2.1 1.8 2.2
 Durable goods -2.4 -1.6 -2.0 -.6 -2.3 -.7
 Nondurable goods 2.3 3.7 5.4 3.3 2.2 1.9
 Services 2.4 2.6 3.7 2.0 2.5 2.9
Private fixed
investment -.1 1.2 2.6 1.9 2.0 .5
 Nonresidential -1.3 .5 1.8 1.6 1.8 -.2
 Structures 2.3 3.9 4.7 3.7 5.0 4.6
 Equipment and
 software -2.5 -.5 .9 1.0 .8 -1.7
 Residential 3.8 3.5 5.2 2.6 2.7 3.1
Government
consumption
expenditures and
gross investment 2.6 3.8 6.4 2.7 2.9 2.5
 Federal 2.6 3.1 7.7 .6 2.6 1.4
 National
 defense 2.5 3.1 7.1 .8 2.9 1.4
 Nondefense 2.8 3.2 8.9 .4 2.1 1.3
 State and local 2.7 4.1 5.7 3.8 3.1 3.0

Addenda:
Gross domestic
purchases:
 Food 1.9 2.3 2.3 2.3 3.5 1.8
 Energy 4.2 18.8 37.7 11.2 11.1 8.4
 Less food and
 energy 1.4 1.8 2.8 1.7 1.5 1.6
Personal
consumption
expenditures:
 Food 2.0 2.4 2.4 2.3 3.7 1.7
 Energy goods and
 services(1) 3.9 17.8 35.1 13.0 8.6 7.0
 Less food and
 energy 1.6 1.6 2.2 1.4 1.1 2.0

(1.) Consists of gasoline, fuel oil, and other energy goods, and of electricity and gas.

NOTE.--Percent changes in major aggregates are shown in NIPA table 8.1. Index numbers are shown in tables 7.1, 7.2, and 7.4.

Prices of personal consumption expenditures (PCE) increased 2.2 percent after increasing 1.8 percent. Prices of food and of energy goods and services increased less than in the third quarter.(5) The deceleration in food prices reflected downturns and slowdowns in the prices of most food categories. The deceleration in energy prices reflected a slowdown in prices of electricity and gas and a downturn in prices of gasoline and oil. Prices of PCE less food and energy increased 2.0 percent after increasing 1.1 percent; the step-up was led by upturns in prices of "other services" (which includes brokerage and investment counseling), of clothing and shoes, and of motor vehicles and parts.

Prices of private nonresidential fixed investment decreased 0.2 percent after increasing 1.8 percent. The downturn partly reflected a downturn in software prices.

Prices of government consumption expenditures and gross investment increased 2.5 percent after increasing 2.9 percent. Prices paid by the Federal Government accounted for most of the slowdown.

The GDP price index increased 2.1 percent after increasing 1.6 percent. The GDP price index, unlike the price index for gross domestic purchases, includes the prices of exports and excludes the prices of imports. Export prices increased 0.6 percent after increasing 0.7 percent. Import prices edged down after a 3.8-percent increase; the downturn reflected a sharp slowdown in prices of petroleum imports and a dip in the prices of non-petroleum imports.

Personal income

Real disposable personal income (DPI) slowed to a 0.5-percent increase in the fourth quarter after increasing 2.6 percent in the third (chart 3). The deceleration reflected a slowdown in current-dollar DPI--to a 2.6-percent increase from a 4.4-percent increase. The slowdown largely reflected the pattern of Federal farm subsidy payments authorized by the Agricultural Risk Protection Act of 2000; excluding these subsidies, current-dollar DPI increased 3.6 percent after increasing 3.5 percent.

[Chart 3 OMITTED]

The personal saving rate (saving as a percentage of current-dollar DPI) continued its downtrend, reaching -0.8 percent in the fourth quarter, its lowest quarterly level since the beginning of the series in 1946. A negative saving rate indicates that outlays are being financed by the sale of assets or by borrowing. At the beginning of 1996, the saving rate was 5.1 percent. The decline since then has not been surprising in light of the large gains in household wealth and the increased willingness of consumers to finance outlays with debt. Despite the weakness in the stock market in the last year, the value of household holdings of corporate equities and mutual fund shares in late 2000 was more than double their level at the beginning of 1996. Increases in debt in the last four quarters for which data are available (1999:IV-2000:III) averaged 60 percent more than in 1996.

Personal income increased $80.8 billion in the fourth quarter after increasing $106.9 billion in the third (table 5). The slowdown was accounted for by a downturn in farm proprietors' income that reflected the pattern of the subsidy payments--a $14.3 billion decrease after a $13.0 billion increase. Excluding these subsidies, farm proprietors' income increased $0.6 billion after decreasing $2.8 billion.

[TABULAR DATA 5 NOT REPRODUCIBLE IN ASCII]

The subsidy payments also affected rental income of persons, which decreased $1.2 billion after decreasing $2.7 billion. Excluding subsidy payments to owners of leased farmland (nonoperator landlords), rental income increased $1.9 billion after decreasing $5.6 billion.

Wage and salary disbursements increased $68.6 billion after increasing $64.8 billion. Disbursements in private service industries and in distributive industries increased more than in the third quarter, but disbursements in private goods-producing industries slowed (reflecting a slowdown in disbursements in manufacturing), as did disbursements in government.

Personal tax and nontax payments increased $35.0 billion after increasing $30.9 billion. The step-up largely reflected the quarterly pattern of State and local income taxes.

The Year 2000

For the year 2000, the favorable news that real GDP posted its strongest increase in the current expansion (5.0 percent) was tempered by the sudden slowdown in economic growth in the third and fourth quarters.(6) Also tempering the optimism was a deceleration in real DPI (up 2.8 percent after an increase of 3.2 percent) and a step-up in inflation as the price index for gross domestic purchases increased 2.4 percent after increasing 1.6 percent.(7)

PCE increased 5.3 percent in 2000 and contributed 3.6 percentage points to the growth of real GDP; half of the PCE increase was in services. Nonresidential fixed investment increased 12.5 percent and contributed 1.6 percentage points to real GDP growth; equipment and software accounted for most of the increase.

The 2.8-percent increase in real DPI reflected a larger increase in current-dollar DPI than in the implicit deflator for PCE. The increase in current-dollar DPI was largely accounted for by wage and salary disbursements, which increased $299.7 billion (or 6.7 percent). Personal tax and nontax payments increased $139.9 billion. The personal saving rate decreased to -0.1 percent from 2.2 percent.

The 2.4-percent increase in the price index for gross domestic purchases mainly reflected increases in prices paid by consumers and by governments. About half of the step-up in gross domestic purchases prices from a 1.6-percent increase in 1999 was attributable to energy prices; excluding food and energy, the index increased 1.8 percent after increasing 1.4 percent.

Advance GDP Estimate for the Fourth Quarter of 2000: Source Data and Assumptions

The "advance" GDP estimate for the fourth quarter is based on preliminary and incomplete source data; as more and better data become available, the estimate will be revised. The advance estimate is based on the following major source data. (The number of months for which data were available is shown in parentheses.)

Personal consumption expenditures: Sales of retail stores (3) and unit auto and truck sales (3);

Nonresidential fixed investment:. Unit auto and truck sales (3), construction put in place (2), manufacturers' shipments of machinery and equipment other than aircraft (3), shipments of civilian aircraft (2), and exports and imports of machinery and equipment (2);

Residential investment: Construction put in place (2) and single-family housing starts (3);

Change in private inventories: Manufacturing and trade inventories (2) and unit auto and truck inventories (3);

Net exports of goods and services: Exports and imports of goods and services (2);

Government consumption expenditures and gross investment: Some Federal outlays were available for 3 months, others, for 2 months; State and local construction put in place (2); State and local employment (3); and the employment cost index for the quarter;

GDP prices: Consumer price index (3), producer price index (3), U.S. import and export price indexes (3), and values and quantities of petroleum imports (2).

BEA made assumptions for source data that were not available. Table A shows the assumptions for key series; a more comprehensive list is available from BEA's Web site at <www.bea.doc.goy> and from STAT-USA's Web site at <www.stat-usa.gov>.

[TABULAR DATA A NOT REPRODUCIBLE IN ASCII]

(1.) Quarterly estimates in the NIPA's are expressed at seasonally adjusted annual rates. Quarter-to-quarter dollar changes are the differences between the published estimates. Quarter-to-quarter percent changes are annualized and are calculated from unrounded data unless otherwise specified.

Real estimates are calculated using a chain-type Fisher formula with annual weights for all years and quarterly weights for all quarters; real estimates are expressed both as index numbers (1996-100) and as chained (1996) dollars. Price indexes (1996-100) are also calculated using a chain-type Fisher formula.

(2.) Exports are included in the production measure (GDP) but not in the demand measure (gross domestic purchases); imports are included in the demand measure but not in the production measure.

(3.) In the NIPA's, consumer spending is shown as personal consumption expenditures, government spending is shown as government consumption expenditures and gross investment, and inventory investment is shown as change in private inventories.

(4.) For more information on motor-vehicle developments, see "Motor Vehicles, 2000" in this issue.

(5.) "Energy goods and services" consists of gasoline, fuel oil, and other energy goods and of electricity and gas.

(6.) The current expansion began in the second quarter of 1991.

(7.) The 2000 increases are calculated from annual levels for 1999 and 2000. From fourth-quarter 1999 to fourth-quarter 2000, real GDP increased 3.5 percent, real DPI increased 2.2 percent, and the price index for gross domestic purchases increased 2.5 percent.