April 29, 2004
Don Evans
Commerce Secretary Don Evans took questions emailed to the White House today regarding the economic growth
during the first quarter of 2004.
Dean, from Bucks County, PA
writes:
Economists had forecast growth of 5.0 percent for the first quarter and it came in at 4.2
percent. Is this a sure sign that the economy is faltering?
Don Evans
The American economy grew at a strong pace of 4.2 percent during the first quarter of 2004 - well above the
historical average, and continuing on the strong growth seen over the previous two quarters. Economic
growth over the last three quarters has been the fastest in nearly 20 years, at a 5.5 percent annual rate
that would double the size of the economy in 13 years. America's economy is trending up in a powerful way
and the source of this positive environment is clear: President Bush's tax relief. The President's policies
have helped to propel the recovery forward, putting more money in the pockets of America's families and
laying a foundation for growth and job creation now and for years to come.
Susan, from San Francisco writes:
How is the Administration reacting to today's numbers?
Don Evans
These numbers are promising. As today's numbers show, the economy continues to grow steadily and strongly.
President Bush's main domestic priority is creating the right conditions so that every American seeking
work can find a job. And that's happening. Employment is up, retail sales are increasing and consumer
confidence is rising. Our economy is on an upward growth track that will deliver increasingly new
opportunities. We're extremely optimistic.
Brent, from Lancaster, Ohio writes:
Should Americans be worried about inflation? The
reason I ask is that a key measure of prices paid by Americans jumped 3.2 percent in the quarter -- the
biggest increase in three years -- after rising 1.3 percent in the fourth quarter.
Don Evans
Inflation remains low and manageable by every historical measure. Inflation is restrained, with the core
consumer price index rising only 1.6% and the core finished-goods producer price index rising only 0.7%
over the last 12 months. Policy makers should bear in mind we are far from the problems caused by rampant
inflation in other periods of time like the late 1970s.
Terri Ann, from Norwich University writes:
Why are businesses still reluctant to build up their inventories?
Don Evans
That reluctance is melting away. Business investment in equipment and software in the first quarter grew at
an 11 percent annual rate. That's a strong number. And CEO confidence, according to the conference board,
is at a 20-year high. Business leaders are becoming more and more confident in the strength of this economy
and business investment is tracking nicely with that confidence. More importantly, business leaders are now
hiring again. Job creation is on the rise with over 750,000 news jobs in the past 7 months and the
unemployment rate at 5.7% is below the average of the 1970s, the 1980s and the 1990s.
Evan, from West Lake Hills, TX writes:
Last week Alan Greenspan said, "Looking forward, the prospects for sustaining solid economic growth in the
period ahead are good." Do you share that optimism? Why?
Don Evans
Yes, I do. I'm extremely optimistic about the strength and vitality of our dynamic economy. My reason is
simple: the American people. They're the source of my optimism. American workers and businesses are the
most productive and innovative in the world. That's the President's belief and that's why he gave all
Americans tax relief - and it's working. President Bush believes that unleashing the power of the private
sector will benefit all Americans. And the results speak for themselves. The economy has grown in the past
3 quarters at the fastest rate of growth in nearly 20 years. More than 750,000 new jobs have been created
in the past 7 months. Real after tax income is up by 10% since December 2000. Consumer confidence is
rising. Housing construction is strong. And the homeownership rate is at an all time high.
Andy, from Linwood writes:
I noticed that jobless claims dropped, which surprised some economists. I don't understand the significance
of these numbers however. There are so many economic factors. What is the importance of this data?
Don Evans
Jobless claims give us a timely read on employment trends that's important to watch. Today's numbers are
again encouraging as initial claims for state unemployment insurance benefits fell. What I pay most
attention to is the four-week average of initial claims because it tends to smooth out weekly fluctuations.
The four week average is now below 350,000 which is a sign that further gains in job creation can be
expected.
