GDP growth at 3.2% misses expectations, but exports take off

The economy picks up in Q4 and growth came where we needed it. Fourth quarter GDP accelerated to a moderately healthy 3.2% annualized gain, following a 2.6% increase the prior quarter. The latest figure fell short of analysts' median forecast for a 3.5% boost. But once you drilldown the numbers are more positive.

The U.S. economy gathered speed in the fourth quarter with a big gain in consumer spending and strong exports pushing demand ahead at the fastest clip in more than 26 years.  GDP would have grown at 7.1% if businesses had not put the brakes on inventories. It was the largest rise in final demand since the second quarter of 1984.

Q4 2010 led with improving net exports to a gap of $392.2 BB from $505.0 BB in the third quarter. Exports rose an annualized 8.5% while imports dropped 13.6%. Also up were personal consumption expenditures, up an annualized 4.4%; business investment in equipment & software, up 5.8%; and residential investment, up 3.4%.

The bottom line is that final sales have picked up significantly. Final sales of domestic product strengthened to a 7.1% increase from 0.9% annualized Q3. Growth in net sales to domestic purchasers (takes out net exports) picked up to 3.4%, following a 2.6% boost in Q3.

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BEA Release
GDP grew at the quickest pace since 2005
A GDP miss, but a positive miss at that

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