Good fourth quarter for US economy: GDP expands at 3% annual rate

Thursday, March 1st 2012 - 04:19 UTC

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Consumer spending was stronger than expected

The US economy grew a bit faster than initially thought in the fourth quarter on slightly firmer consumer and business spending, which could help to allay fears of a sharp slowdown in growth in early 2012.

GDP expanded at a 3% annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its second estimate. That was a step up from the 2.8% pace it reported in January. The economy grew at a 1.8% pace in the third quarter.

While the build-up in business inventories still accounted for much of rise in output in the last quarter, the revisions to GDP unveiled an improved tone for the first-quarter growth outlook.

Businesses were not as aggressive in their restocking efforts, which should help to allay fears of a sharper slowdown in output this quarter.

In addition, consumer spending, which accounts for about 70% of US economic activity, was a touch firmer than initially thought. Consumer spending rose at a 2.1% rate instead of 2%.

Even spending on home building was firmer than previously estimated and investment on non-residential structures was modestly weak.

So far data ranging from employment to manufacturing have shown underlying strength in the economy, reducing the need for the Federal Reserve to ease monetary policy further by launching a third round of asset purchases or quantitative easing.

Categories: Economy, United States.

Tags: Federal Reserve, US economy, US GDP.

Top Comments

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laceja
What a joke! The Fed has been buying up sovereign securities, including US, at an accelerating pace. They just haven't been advertising it.

And, the idea that any real growth has occurred is absurd. The economy grew at a 3% pace, while prices for food and gasoline have skyrocketed. And, the only reason unemployment claims have dropped is because, no one is bothering to look for work any more or they are working “informally”. Just take a look at how the IRS is making a huge push now to take a bite out of whatever folks are making from eBay and PayPal sales... mostly selling their use things, purchased with dollars they already paid taxes on.

The net of it is, the economy has actually shrunk and the government grows and grows to snatch more and more out of our pockets.
Mar 01st, 2012 - 03:19 pm 0
RMJR
And no real job creation!!!
Mar 01st, 2012 - 06:09 pm 0

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