How Did the U.S. Economy Perform in Q4 2002?

The official growth figures for the last quarter of 2002 are in. They say the U.S. economy grew by only 0.7 percent, creating an overall growth rate of 2.8 percent for last year. Consumer spending and business investment remained down, so what added to the growth bottomline for Q4 2002? The answer is government spending, which increased by 10.1 percent to support the U.S. military mobilization in the Middle East. Without the increased government spending, it is estimated that the economy would have shrunk by 0.2 percent in the final quarter of last year.

Neither consumer spending or business investment are expected to play much of a role in economic growth in the first quarter of 2003, and most economists do not see either returning until the Iraqi conflict is much better understood.

What are the implications of this news to local economic development? We should not expect much action out there at least through March and probably longer. As I've said before, this is a good time to plan and it is still very important to communicate with your business prospects--both existing and new--during this period of slow growth and uncertainty. Bottomline: don't abandon hope of some solid growth.

For more information on the economic siutuation, visit Economy.com, WEFA, or the U.S. Department of Commerce websites.