Economy Expands at 4% Pace in Fourth Quarter

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he U.S. economy grew at 4% annual pace in the fourth quarter of 2003, and 3.1% for all of 2003, the Commerce Department said Friday.

The rise in gross domestic product, the value of all goods and services produced, followed an 8.2% pace in the third quarter, the strongest since the fourth quarter of 1983. The economy grew at a 2.2% clip in 2002.

Economists had forecast a 5% rise in fourth-quarter GDP, Bloomberg reported.

Commerce said consumer spending grew at a 2.6% annual pace from October through December. That was well below the 6.9% increase in the third quarter that was the largest since 1986.

Business fixed investment, which includes spending on commercial construction as well as equipment and software, rose at a 6.9% annual rate in the fourth quarter, following a 12.8% increase a quarter earlier.

Companies boosted inventories at a $6.1 billion annual rate, Commerce said, compared with a $9.1 billion reduction in the third quarter. The increase added 0.61 percentage point to GDP.

Commerce also said government spending rose at a 0.8% annual rate last quarter, after rising 1.8% from July through September.

The personal consumption expenditures price index, a measure of inflation, rose at a 0.6% annual pace, the slowest pace in 41 years.

Adjusted for inflation, GDP totaled $10.597 trillion at an annual rate.

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