10
GDP - GROSS DOMESTIC PRODUCT
Since the Fed tightening in 1999 the economy began to slow. U.S. GDP growth slowed in the
3
rd
Quarter to 2.2% which was the slowest growth in 4 years. The 2
nd
Quarter was 5.6%.
Here is how 1999 and 2000 compared
Quarter
1999
2000
1
st
3.6%
4.8%
2
nd
2.5%
5.6%
3
rd
5.7%
2.2%
4
th
8.3% Figures not in yet
It is forecast that the 4
th
quarter will be in the 1.75% to 2.0%. Overall for next year the GDP
growth is estimated at 2% -2 - ½ % for the year. The economy will slow further and as
expected interest rate cuts kick in then growth will start to pick up by the 3
rd
quarter.
The NYC Office of Management and Budget forecast no change in Gross City Product for
Year 2001over the year 2000.
STOCK MARKET
On January 14
th
, 2000 the stock market was 11,722.96. On Friday, February 25
th
, 2000 is
closed down below the 10,000 mark. On the last business day of the year the Dow was down
almost 10%. It was the first down year in a decade.
The market apparently had been responding the Fed's interest rate increases, earning
warnings from many companies, energy prices and the presidential election situation.
In December the NASDAQ fell over 50% from its record high. On December 21
st
, it fell to its
lowest level in 20 months. However on December 22
nd
it rallied by 8%. As of the last business
day of the year it was down almost 40% for the year. According to the Wall Street Journal,
12/28/2000 " Stock Mutual Funds reported a 54% drop in new money last month, marking the
biggest decline in nearly two years, amid the slump in share prices." A large # of the dot com
companies went out of business. A predominance of the current ones had drops in prices per
share greater than 40%.
Estimated earnings growth for technology, consumer cyclicals, consumer staples and the Total
S&P are projected to be significantly lower next year. The issue of day trading has been
receiving a lot of press lately. The margin requirements should be increased as a buffer in
case of a sharp downturn.
It appears that the year 2000 stock market was the worst year since the 1970's. It is forecast
