After a sizzling spring, growth in the U.S. economy slowed dramatically in the summer, rising at a modest 2.2 percent annual rate as consumer spending dipped to its weakest pace in five years.
The Commerce Department report Wednesday on the gross domestic product showed that the economy's total output of goods and services from July through September was less than half the 4.7 percent rate of increase turned in during the second quarter.Price pressures eased in the third quarter, with an inflation gauge tied to GDP rising just 1.9 percent at an annual rate, the smallest increase since a 1.8 percent rise in the summer of 1993. An alternative GDP price index rose 2.2 percent in the spring and 2.3 percent in the first quarter.
The 2.2 percent GDP increase for the third quarter was the slowest advance since a tiny 0.3 percent rise from October to December last year. GDP rose 2 percent in the January-March quarter.
While Republican challenger Bob Dole has seized on recent reports of an economic slowdown to bolster his arguments that the economy is not doing all that well under President Clinton, analysts said Clinton could hardly hope for a better set of statistics right as voters head to the polls.
"For an incumbent president, this is a stress-free economy," said analyst Robert Dederick, who was chief Commerce Department economist during the Reagan administration. "While growth is not as rapid as it was in the spring, it is still at a comfortable level and inflation remains offstage."
Many private analysts say that a 2.2 percent growth rate is optimum for the sixth year of an economic expansion, third longest in U.S. history.
At this stage of a recovery, that level of growth is sufficient to take care of new entrants into the labor market but not so rapid that it will lead to increased inflationary pressures, they say.
For that reason, the Fed is likely to leave interest rates unchanged when they next meet on Nov. 13.