Economic Growth Estimates Revised
First-Quarter Figures Show That Recovery Lost Some Momentum
By Nell Henderson
Washington Post Staff Writer
Saturday, June 26, 2004; Page E01

The U.S. economy's growth slowed slightly in the first three months of this year, the government reported yesterday, reversing earlier estimates that the recovery had gained momentum during that period.

The economy grew at a 3.9 percent seasonally adjusted annual rate in the first quarter, a slowdown from the 4.1 percent pace of the previous quarter, the Commerce Department said.

That contrasted with the department's earlier estimates that the nation's output of goods and services, or gross domestic product, had jumped in the first quarter. Commerce initially said in April that first-quarter GDP had increased at a 4.2 percent annual rate, and then in May raised the estimate to 4.4 percent.

Those rosier numbers had earlier led economists and investors to believe that economic growth had picked up speed, in part because tax cuts and low interest rates gave consumers more cash to spend.

Instead, the new numbers show that the economy lost a little momentum as it began the year. This was primarily because more of that additional cash was used to pay for imports, rather than American-provided goods and services, than was earlier thought. So while overall demand was still relatively high, it translated into less business for U.S. companies.