The U.S. economy roared ahead in the spring, growing at a 5.6 percent annual rate, stronger than the government previously thought. Solid investment by American businesses offset less brisk spending by consumers.
The Commerce Department reported today that in the April-June quarter the increase in the gross domestic product surpassed growth in the first quarter, when the economy expanded at a 4.8 percent annual rate. GDP is the nation's total output of goods and services and the broadest measure of economic health.
The government's final reading on GDP -- based on more data than its previous calculations -- showed the economy growing more quickly than the 5.3 percent rate it estimated one month ago and the 5.2 percent rate initially calculated. The 5.6 percent rate marked the best showing since the fourth quarter of last year.
The second-quarter performance also was stronger than many analysts expected. They anticipated that growth would hold steady at 5.3 percent. In the current quarter, many analysts believe the economy has slowed to a growth rate in the 3 percent range.
Consumer spending, which accounts for two-thirds of all economic activity, also slowed in the second quarter, rising at a 3.1 percent rate.
Chrysler division to post loss
DETROIT (AP) -- DaimlerChrysler AG warned Wednesday that its Chrysler side would report a loss for the quarter because of high U.S. incentives and the costs of launching new versions of its minivan and mid-size sedans.
After posting a third-quarter profit of 1 billion euros last year, the Chrysler group will report a loss of 600 million euros ($531 million) for the quarter this year.
For 2000, DaimlerChrysler's overall operating profit will fall to about 7 billion euros ($6.2 billion), down from 10 billion euros in 1999 after adjusting for one-time charges.
The full-year outlook is "way below earlier forecasts, so things have gone seriously wrong," said Adam Jonas, an analyst at Morgan Stanley Dean Witter in London. The bank was predicting full-year operating profit of $7.6 billion, he said.
In September, Chrysler's incentives had ballooned to $2,700 a vehicle, compared with $2,039 at the same time last year and $1,800 a vehicle in January, according to Art Spinella with CNW Marketing/Research in Bandon, Ore. Some of its incentives can reach $4,000 a vehicle.