WASHINGTON — The U.S. economy, hit by a drop in spending on big-ticket items by businesses and consumers, grew at an annual rate of just 1.0 percent during the last three months of 2000, the weakest performance in more than five years.
The Commerce Department's final reading Thursday on fourth-quarter gross domestic product — the total output of goods and services produced within the United States — showed the economy grew a bit more slowly than previously thought.
One month ago, the government pegged fourth-quarter growth at a 1.1 percent rate and before that at a 1.4 percent rate. Many analysts expected the final GDP reading to stay unchanged at the 1.1 percent rate.
In the third quarter, the economy grew at a 2.2 percent rate.
Thursday's report also showed that after-tax profits of U.S. corporations fell in the fourth quarter by 4.3 percent, reflecting the toll of the economic slowdown and higher energy prices. That was the largest decline since the first quarter of 1998, when profits dropped by 8.4 percent. In the previous quarter, profits grew by 0.6 percent.
On Wall Street, stocks turned downward for a second straight session as doubts about earnings and the economy again thwarted the markets' efforts to rally. The Dow Jones industrial average was down 62 points and the NASDAQ lost 24 points in the first half-hour of trading.
Analysts project the economy has continued to lose steam in the first three months of this year. They estimate GDP at anywhere from a rate of negative 0.3 percent to a positive 0.8 percent in the current January-March quarter.
Thursday's GDP report underscores just how quickly and deeply the economy has slowed since last spring, when expansion roared ahead at a 5.6 percent annual rate.
At that time, the Federal Reserve, worried that the economy could overheat, was boosting interest rates to rein growth back to a more sustainable pace that wouldn't spark inflation.
The swiftness and the depth of the current slowdown, however, has led some economists to believe the Fed pushed rates up too high.
This year, the central bank has cut interest rates three times, totaling 1.5 percentage points, in an effort to prevent a recession. Many analysts expect additional rate reductions.
In another report, new claims for state unemployment insurance fell by 20,000 to 362,000 last week but still hovered at a level suggesting employers' appetite for workers has waned as the economy has slowed.
The 1.0 percent rate of growth in the fourth quarter was the slowest since a 0.8 percent increase in the second quarter of 1995.