The Commerce Dept. reported this morning that annualized growth in gross domestic product reached 3.2 percent in the fourth quarter of 2010, the sixth quarter of growth in that measure. With today's number, adjusted for inflation and seasonality, GDP has risen 0.2 percent above pre-recession levels, the previous peak having come in the fourth quarter of 2007. Total GDP growth for 2010 was 2.9 percent.
The results were slightly below what analysts had expected. GDP growth will be revised in two follow-up reports next month and March. Today's number was substantially less than the fourth quarter of 2009, the best showing since the Great Recession began in December 2007. A key number in today's report was final sales, which was up a healthy 7.1 percent.
Real personal consumption expenditures increased 4.4 percent in the fourth quarter, compared with an increase of 2.4 percent in the third. Durable goods increased 21.6 percent, compared with an increase of 7.6 percent. Nondurable goods increased 5.0 percent, compared with an increase of 2.5 percent. Services increased 1.7 percent, compared with an increase of 1.6 percent.
Real nonresidential fixed investment increased 4.4 percent in the fourth quarter, compared with an increase of 10.0 percent in the third. Nonresidential structures increased 0.8 percent, in contrast to a decrease of 3.5 percent. Equipment and software increased 5.8 percent, compared with an increase of 15.4 percent. Real residential fixed investment increased 3.4 percent, in contrast to a decrease of 27.3 percent.
Real exports of goods and services increased 8.5 percent in the fourth quarter, compared with an increase of 6.8 percent in the third. Real imports of goods and services decreased 13.6 percent, in contrast to an increase of 16.8 percent. ...
Real GDP increased 2.9 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 2.6 percent in 2009.
The increase in real GDP in 2010 primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), nonresidential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
Many observers have predicted that GDP growth will run about 4 percent in 2011. If that forecast panned out, it would begin making a substantial dent in the vast rolls of the unemployed Americans, now officially at 14.5 million. Many more millions have given up looking for work, dropped out of the labor force entirely or been forced to take part-time jobs even though they need full-time work. But so far, consumer spending, while substantially improved, has been up and down. Because of that and related reasons, the Congressional Budget Office has forecast a 3.1 percent growth in GDP for all of 2011. That level of growth would only bring down unemployment slowly, perhaps leaving it above 9 percent at the end of the year.