From Holden:

The GDP increased by a disappointing 3.7% during the 3rd quarter of 2004, a good half a percentage point below what had been expected. The Commerce Department is trying to paint a rosy picture, but the Greenspan-favored index of personal consumption expenditures minus food and energy costs increased at a paltry rate of 0.7%, the lowest increase in that measure since 1962. In other words, the highly touted increase in Consumer Spending is primarily due to higher energy and food costs. Whoopee!

The U.S. economy expanded at a 3.7 percent annual rate in the third quarter, below expectations but still bolstered by healthy consumer spending that was accompanied by the lowest inflation in decades, the Commerce Department said on Friday.

Though the third-quarter expansion in gross domestic product — the measure of total output within the nation’s borders — came in below Wall Street economists’ forecasts for a 4.2 percent pace of growth, it still was up from 3.3 percent in the second quarter.

[snip]

Some analysts noted that America’s swelling trade deficit seemed to be putting a damper on the rate of expansion but not putting a lid on it entirely.

“It’s a pretty good growth rate, but it may not be enough to create jobs,” said economist Robert Brusca of Fact and Opinion Economics in New York.

[snip]

Consumer spending, which accounts for about two-thirds of economic activity, increased at the fastest rate in a year while a price gauge that is favored by Federal Reserve Chairman Alan Greenspan – the index of personal consumption expenditures minus food and energy – barely increased at a 0.7 percent rate.

That was the smallest gain in this price measure in nearly 42 years, since a 0.5 percent rise in the fourth quarter of 1962, department officials said.