The US Bureau of Economic Analysis (BEA) reported this morning that the economy grew at a real 4.2% annualized rate in the first quarter of 2004, compared to a real 4.1% annualized rate in the fourth quarter last year. This is slightly under the concensus forecast of real 5% growth. Since these advance estimates exclude certain data that are still being tabulated, the estimates will be revised each of the next two months.
A week ago, the International Monetary Fund (IMF) forecast real 4.6% growth in the US for the entire year. This compares to a real 2% annual growth forecast for the European Union and 1.7% for the Euro Area, continuing the divergence between good growth in the US and modest growth in Euro Area economies (see page 10). German unemployment is expected to top out this year at 10.2%, unless Germany experiences a triple-dip recession.
Expect a lot of handwringing and cross-Atlantic comparisons from the European press regarding their economies in the coming years, as happened in the boom years of the late 1990s. I find such arguments a little overheated, but it is interesting to listen to the debate in order for us to think about what we can improve in our economy state-side, especially with regard to technological innovation.