Friday, March 25, 2011

Economy grows at 3.1% rate in 4Q

By Martin Crutsinger, Associated Press

Updated 29m ago |

114 |

WASHINGTON — The economy grew a little faster at the end of 2010 than the government had previously estimated, boosted by more inventory building and business investment in plants and equipment.

By Mary Altaffer, AP file
Fourth-quarter GDP was helped by strong consumer spending. like these folks Dec. 26, 2010 in Union Square, in New York.

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By Mary Altaffer, AP file

Fourth-quarter GDP was helped by strong consumer spending. like these folks Dec. 26, 2010 in Union Square, in New York.

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The economy, as measured by the gross domestic product, grew at an annual rate of 3.1% in the October-December quarter, the Commerce Department reported Friday. That represents an upward revision from last month’s 2.8% estimate for the same period.

The gains offset a slightly larger trade deficit.

Many economists believe the economy has slowed in the current January-March quarter.

INTERACTIVE: Tracking the economy

A jump in oil prices fueled by political unrest in the Middle East and North Africa threatens to cut into consumer spending. There is also a concern that the Japanese crisis will disrupt factory production there. That could slow activity at some U.S. companies that rely on Japanese manufacturers for parts, especially in the U.S. auto and electronics industries.

Measuring the economy

The uncertainty has led many economists to trim their growth estimates for the current quarter. There is a wide range of estimates, from 2.3% to 3.8%.

Economists say growth needs to average around 5% for a year just to lower the current 8.9% unemployment rate one percentage point.

The government’s estimate of 3.1% growth in the October-December quarter represents the strongest performance since the start of last year, when the economy grew at a 3.7% rate.

For the final three months of the year, consumer spending grew at an annual rate of 4%, the strongest showing in four years. Consumer spending is closely watched because it accounts for 70% of economic activity.

Residential construction grew at an annual rate of 3.3% after plunging at a 27.3% rate in the July-September quarter. However, there is concern about the prospects for housing given recent weakness in home sales and construction.

Government spending shrank at a rate of 1.7%. State and local governments are struggling to get budget deficits under control.

Last year, the economy grew 2.9% following a 2.6% drop in 2006. That was the biggest decline in more than six decades.

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Posted 5h 12m ago | Updated 29m ago

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100 comments

Sort:

Score: 20

BW_USA

8:57 AM on March 25, 2011

Based on massive government deficit ( $1.6T this year ) and massive Federal Reserve fiat printing .

Score: 1

czubek

9:03 AM on March 25, 2011

The fence begins to get comfortable.

Score: -19

Jerry999

9:07 AM on March 25, 2011

Looking good DEMS! We'll get this GOP crashed economy back on it's feet yet

2 replies

Score: 21

Gene Hunt

9:31 AM on March 25, 2011

Considering the government understates the true inflation rate, this translates into an inflated gross domestic product. Most of this increase is directly attributable to inflation.

1 reply

Score: 21

NewDay12

9:50 AM on March 25, 2011

I'll wait for the "unexpected revised number"

Score: 15

NewDay12

9:52 AM on March 25, 2011

1) 3.2% is terrible considering QE2....if not for QE2 we would definately have negative growth.

2) When you factor in inflation and population growth this number is flat or slightly negative.

****BANKSTERS AND GOVERNMENT FRAUDSTERS****

THERE IS NO RECOVERY!

1 reply

Score: 17

Screwball

9:55 AM on March 25, 2011

YA YA YA. I have been hearing how the economy has been on the upswing since 2009 when obama said the recession was over. Well, democrat or republican; i dont care who fixes this mess. The fact is I am not seeing anything that gives me the slightest inkling of this recession being over; nor, have i seen anything in the job sector. So, i am glad the market is doing well... But this is still a jobless recession and we are not getting out of it until jobs are created (and jobs at wal-mart, best buy or the dollar store count, because they seem to be the #1-3 employers for full-time work over the last 2yrs according to the US Dept. of Labor)

Score: 8

brewser

10:36 AM on March 25, 2011

Duh!

Whenever there is a spike in oil prices it drives up the cost of everything, which is a ,means to generate more sales tax to support government budgets throughout the USA that are under water.

The biggest consumer of oil in the world is the US military, which is now being deployed to create chaos in Libya. Half of Libya is now a no-fly zone.

Score: 1

sdc.clark

10:37 AM on March 25, 2011

As expected and welcomed news.

Score: 8

12-21-2012

10:38 AM on March 25, 2011

Well, let's see. Since then we have had a massive eathquake and tsunami, radiation spewing out in Japan, their economy in tatters for now, trouble in just about every Muslim sand country in the Middle East, a new war launched by Obama under orders from France (!?), the price of oil skyrocketing, the cost of food and gas in the USA heartland also skyrocketing, and Obama enjoying a family vacation in Rio with 100 of his closest financial backers, all the while urging them to drill for oil while holding our own people and job creators from doing the same. Wow. I do not expect such "gaudy" numbers for the first qurter of 2011. And I add, his New World Order stinks.

1 reply