WASHINGTON – Economic momentum at the end of 2004 was significantly stronger than previously thought, according to a Commerce Department (search) report on Friday that revised up fourth-quarter national output to reflect a stronger trade and investment performance.
Gross domestic product (search), the gauge of total goods and services production within U.S. borders, grew at a revised 3.8 percent annual rate in the final three months of last year instead of 3.1 percent reported a month ago. That was slightly stronger than the 3.7 percent rate that Wall Street economists had forecast and only a small decline from the third quarter's 4 percent pace.
Nearly half the revision stemmed from a stronger trade performance, reflecting more robust exports than previously thought. Statistics Canada corrected a $1.4 billion error in underestimating U.S. exports to Canada during November, and later data also showed the U.S. trade deficit for December narrowed more than had been anticipated.
Despite the fourth-quarter revision, there was no change in the government's calculation that GDP grew 4.4 percent during 2004, much stronger than the 3 percent increase posted in 2003 and the strongest for any year since 1999 when it expanded 4.5 percent.
Inflation showed signs of perking up during the fourth quarter. A price index favored by Federal Reserve (search) Chairman Alan Greenspan (search) — personal spending minus food and energy costs — increased at a 1.6 percent annual rate that was close to twice the 0.9 percent gain recorded in the third quarter.