The Commerce Department reported that its final estimate of third quarter growth in gross domestic product (GDP) was a 4 percent annual increase. Third-quarter growth was considerably higher than the 1.3 percent increase for the second quarter, or the 1.3 percent decrease from the third quarter of last year. Analysts attribute the strong third quarter results to consumer spending. Whether economic growth will continue at this rate or slow is a matter of some concern. Evidence from the last months of 2002 suggests that spending has indeed slowed and a hoped-for Christmas surge in spending did not materialize.

Sagging business investment continues to be a trouble spot as far as spending is concerned. Spending on plant and equipment dropped 0.8 percent in the third quarter, the eighth consecutive quarterly decline in such spending. Alan Greenspan, chairman of the Federal Reserve, believes that uncertainty about a possible war with Iraq may be responsible for the decline. Mr. Greenspan said, "Any significant fall in the current geopolitical and other risks should noticeably improve capital outlays, the indispensable spur to a path of increased economic growth."

Consumer spending increased at an annual rate of 4.2 percent in the third quarter. Auto sales were particularly strong because of zero-percent financing and other incentives that dealers were offering. In the second quarter consumer spending increased a modest 1.8 percent.

There was other positive news about the economy. The Conference Board released its Index of Leading Indicators, a measure of the future course of the economy over the next three to six months. November's index was up 0.7 percent, which is an indication of a healthy economy in the second quarter of 2003. October's increase was 0.1 percent.

(Updated February 5, 2003)