U.S. economy grows faster than expected in fourth quarter
A recovery in manufacturing and gains in consumer spending help expand the nation's gross domestic product at a robust 5.7% annual rate.
By Don Lee
LA Times
January 29, 2010
Reporting from Washington
The U.S. economy grew at an accelerated pace in the last quarter of 2009, driven largely by a rebound in manufacturing and better-than-expected gains in consumer spending and commercial investments, according to Commerce Department statistics released today.
The nation's gross domestic product -- or total goods and services produced in the U.S. -- expanded at a robust 5.7 % annual rate in the fourth quarter. That's more than double the 2.2% growth in the third quarter and a dramatic turnaround from the first three months of 2009, when the economy shrank by 6.4%.
The latest GDP growth rate was about a percentage point higher than most economists' forecasts, with consumer spending and an upturn in commercial investments contributing more than what was expected. These are encouraging signs and could prompt analysts to raise their growth forecasts for this year.
Even so, the fuel behind the fourth-quarter acceleration won't last as it was mostly temporary: an extraordinarily big swing in inventory levels that accounted for 60% of the quarterly growth. With manufacturing recovering from the recession and consumers purchasing more, producers stopped their massive liquidation of stocks and many have begun to boost inventories.
(More here.)
By Don Lee
LA Times
January 29, 2010
Reporting from Washington
The U.S. economy grew at an accelerated pace in the last quarter of 2009, driven largely by a rebound in manufacturing and better-than-expected gains in consumer spending and commercial investments, according to Commerce Department statistics released today.
The nation's gross domestic product -- or total goods and services produced in the U.S. -- expanded at a robust 5.7 % annual rate in the fourth quarter. That's more than double the 2.2% growth in the third quarter and a dramatic turnaround from the first three months of 2009, when the economy shrank by 6.4%.
The latest GDP growth rate was about a percentage point higher than most economists' forecasts, with consumer spending and an upturn in commercial investments contributing more than what was expected. These are encouraging signs and could prompt analysts to raise their growth forecasts for this year.
Even so, the fuel behind the fourth-quarter acceleration won't last as it was mostly temporary: an extraordinarily big swing in inventory levels that accounted for 60% of the quarterly growth. With manufacturing recovering from the recession and consumers purchasing more, producers stopped their massive liquidation of stocks and many have begun to boost inventories.
(More here.)
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1 Comments:
what is the growth if you take out government expenditures from the GDP calculation? The GDP calculation is the sum of the output from these components:
private consumption (P)
gross investment (I)
government spending (G)
exports (X)
-imports (- M)
The government component obfuscates the private expenditures because government does not invest or create wealth, but rather must take from the private economy in the form of taxation in order to spend it (or by borrowing or inflating). So, the government component in the calculation amounts to a double counting.
Even though this is good news, the reality is this is propped up growth by the government and does not truly represent an accuarate account of GDP.
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