WASHINGTON - The perspective was decidedly different yesterday in two reports on the economy - a look back showing strong growth last summer and a troubling view of what's ahead in 2008.
The Commerce Department said the gross domestic product sprinted ahead at a 4.9 percent pace during this year's third quarter, the fastest growth in four years.
The performance was especially impressive given that the housing market plunged deeper into despair in the July-to-September period. Builders cut spending on housing projects in the July-to-September period at an annualized rate of 20.5 percent, the most in 16 years.
The housing and credit debacles are expected to weigh on individuals and businesses starting in the current quarter. Economic growth from October through December is forecast to have slowed to a pace of just 1.5 percent or less. Economic activity is measured by the gross domestic product, the value of all goods and services produced within the United States.
The other report, from the Conference Board, showed that its gauge of future business activity fell 0.4 percent in November to its lowest level in more than two years. The report suggested that the economy's slowdown will persist into early next year.
The index is an indicator of where the U.S. economy is headed, and persistent weakness can signal a recession in three to six months.
Seven of the 10 indicators in the index fell last month - stock prices, average weekly initial claims for unemployment insurance, index of consumer expectations, real money supply, building permits, interest-rate spread, and manufacturers' new orders for consumer goods and materials.
The three that rose were vendor performance, average weekly manufacturing hours, and manufacturers' new orders for nondefense capital goods (business equipment, such as machinery).
"The economy is slowing down so fast this quarter, you can see the skid marks as it slams on the brakes," said Stuart Hoffman, chief economist at PNC Financial Services Group, of Pittsburgh.
The big worry is that individuals will cut back on their spending and throw the economy into a recession.
The collapse of the once high-flying housing market, a mortgage meltdown, and a painful credit crunch have propelled home foreclosures to record numbers. Credit problems have made it harder for people to get financing to buy a home, aggravating the housing slump.
In the third quarter, housing lopped a sizable 1.08 percentage points off GDP.
The report showed that consumer spending grew at a lukewarm pace of 2.8 percent in the third quarter. "The last major pillar supporting economic growth - consumer spending - may soon start to buckle," warned Bernard Baumohl, managing director of the Economic Outlook Group.
A third report issued yesterday showed that new applications for jobless benefits rose 12,000, to 346,000, more than economists were expecting.