an annual rate of 1.1 percent. This is a "preliminary" estimate for fourth quarter and is based on incomplete information; a final revision will be released in March. This estimate is a slight revision of the announcement released one month ago. During the previous three quarters of 2000, real GDP increased at annual rates of 4.8, 5.6, and 2.2 percent. From 1999 to 2000, real GDP increased by 5.0 percent, compared to an annual increase of 4.2 percent from 1998 to 1999.Trends Growth in real GDP over the last few years has been increasing and is relatively high when compared to recent periods. However, the rate of increase in real GDP during the last year has been slowing quickly, particularly during these last two quarters of 2000.The growth rate in real GDP during the fourth quarter is the lowest since the second quarter of 1995 and is perhaps one more signal that the Federal Reserve's efforts in the last year and a half to slow the rate of increase in spending in the economy have had significant effects. From June 1999 to early January of this year, the Federal Reserve used its monetary policy to increase interest rates in order to prevent inflationary pressures. The slowing growth in real GDP has contributed to the news reports of increasing concern with the possibility of a recession, that is, an actual decrease in production. The last recession began in July of 1990 and continued through March of 1991. The Federal Reserve responded in January of 2001 with two reductions in the target federal funds rate. The GDP deflator (the price index representing all goods and services in GDP) increased at an annual rate of 1.8 percent in the fourth quarter, compared to 2.0 in the third quarter of 2000. For all of 2000, the price index increased 2.4 percent, compared to a 1.6 percent increase during all of 1999. The rate of increase in real GDP has been higher in the last several years than in the first part of the 1990s and much of the 1970s an...
