Economic growth during 1997 hits a 9-yr high

Real GDP is estimated to have increased at a solid 4.3% annual rate during the October-December period of last year. This preliminary estimate from the Commerce Dept. was just the latest in a long string of better-than average reports on U.S.

03/01/1998


Real GDP is estimated to have increased at a solid 4.3% annual rate during the October-December period of last year. This preliminary estimate from the Commerce Dept. was just the latest in a long string of better-than average reports on U.S. economic growth. The most important contributors to economic growth in the fourth quarter of 1997 were consumer spending, exports, and business investment in product inventories.

In 1997, GDP increased by 3.8% -- the strongest growth in the U.S. economy since 1988. Export sales increased by 12.5% last year -- the biggest gain in 9 yr -- while business investment jumped by 12.2%, the largest increase in the past 13 yr. Inflation was tame, rising by just 2% -- the smallest increase since 1965.

However, business investment in new plants and equipment, which has been the driving force behind this long period of economic expansion, declined during the final three months of last year. Both components of total business investment -- spending for structures and for durable equipment -- recorded declines between the third and fourth quarters. During the fourth quarter of 1997, overall business investment (the sum of these two categories) fell at a 3.6% annualized rate, after growing by an average of 16.9% during the two prior quarters. Business spending for new equipment grew at a much stronger rate for the year as a whole -- 12.2% vs a 10.9% average for 1995-96 -- but it declined at a 3.9% annualized rate during the final three months of 1997.

The drop-off in business investment spending over the final months of 1997 should be seen as a warning flag, particularly for manufacturers and distributors. While it had been widely anticipated that capital spending would cool from the exceptional growth rates registered during the second and third quarters of last year, the absolute decline in spending during the final months of 1997 came as a surprise. The crisis in Asian currency and financial markets undoubtedly played a major role in this slowdown as American firms adopted a wait-and-see attitude about the implications of the crisis for their businesses. Performance in early 1998 will tell us whether this crisis is a blip on the economic weather screen, or a full-fledged tornado.





No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
2014 Product of the Year finalists: Vote now; Boiler systems; Indirect cooling; Integrating lighting, HVAC
High-performance buildings; Building envelope and integration; Electrical, HVAC system integration; Smoke control systems; Using BAS for M&V
Pressure piping systems: Designing with ASME; Lab ventilation; Lighting controls; Reduce energy use with VFDs
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Consulting-Specifying Engineer case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Protecting standby generators for mission critical facilities; Selecting energy-efficient transformers; Integrating power monitoring systems; Mitigating harmonics in electrical systems
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software
Integrating BAS, electrical systems; Electrical system flexibility; Hospital electrical distribution; Electrical system grounding
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.