Cross Timbers Business Report
Published by Tarleton State University, William L. Beaty, Editor
Volume 12, No. 4
Summer 1999
Nation's Output Growth Slows
By William L. Beaty
A preliminary report from the U.S. Bureau of Eco-
nomic Analysis indicates real gross domestic product
(GDP) grew at a 2.3 percent annual pace in 1999's sec-
ond quarter. This growth rate falls well below both
1998's 4.2 percent expansion and the first quarter's 4.3
percent rise. This slowdown also brings the real GDP
growth rate within the 2 to 3 percent range many
economists associate with price stability and full em-
ployment.
Prior to last quarter, strong growth in consumer
spending and investment offset declines in net exports
and government purchases. However, weakness in du-
rable and nondurable goods outlays reduced the growth
of consumer purchases to 4.0 percent, while gross pri-
vate domestic investment spending grew at only a 3.2
percent pace.
Net exports continued to exert downward pressure
on total domestic purchases, as imports grew at more
than twice the pace of exports. Government purchases
of goods and services declined at a 1.2 percent rate in
the April-June period.
INFLATION RATES
(Annual Changes in Consumer Prices)
Percent
108.7
9
8
7
6
5 .7
4 2.9
3 2.2 2.2 2.2 2.2 2.2
2 1.5 1.5 1.5
0.7
1 0
0
Apr Jun Aug Oct Dec Feb Apr Jun
1998 , 1999
Source: Bureau of Labor Statistics
A surge in energy prices sparked an 8.7 percent
jump in consumer prices in April. This increase
touched off inflationary fears among economists and
Wall Street investors. This brief spurt was followed
by a flat price pattern in the following two months,
however, convincing most observers the one-month
advance was an aberration.
Last month's real GDP estimate is preliminary and
is based on data for the quarter's first two months only.
Two monthly revisions will be made before final esti-
mates are released.
Changes in Real GDP
Annual Percentage Rates
7
5.9
6 5.4
4 4.3
2 2.9
(.t3 ( d4 U U U3 U4 UI W
1997 i 1998 I 1999
Source: Bureau of Economic Analysis, U. S. Department of Commerce
Labor Markets Remain Strong
By William L. Beaty
Data from the U.S. Bureau of Labor Statistics and
the Texas Workforce Commission show continued
strength in labor markets at the national, state, and local
levels. Jobless figures through mid-1999 continue at or
near full employment levels, and most jurisdictions re-
port improvements from year-before values.
Strong employment growth at the national level
worked to maintain the U.S. unemployment rate at an
average level of 4.3 percent in the first six months of
1999. June's employment report marks the 24thcon-
secutive month the nation's jobless statistic has re-
mained below 5 percent, a figure many economists con-
sider to represent a fully employed labor market. To
date, however, no evidence exists to suggest these tight
market conditions have contributed significantly to wage
or price increases. Unemployment averaged 4.5 percent
in the first six months of last year.
Texas' jobless figure declined from 4.9 percent in
May 1999 to 4.7 percent in June. Employment ex-
panded in every major sector except nondurable goods
manufacturing, which suffered from plant closings in the
