Economy grew at 3 percent, better than estimated
AP
WASHINGTON - The economy grew at a slightly faster pace in the final three months of last year, and Americans earned more income than previously reported. That could set the stage for stronger growth this year.
The Commerce Department said Wednesday that the economy expanded at a 3 percent annual rate in the October-December quarter the fastest pace since the spring of 2010. It exceeded the previous estimate of 2.8 percent. And it was better than the third quarter's 1.8 percent growth rate.
The growth estimate was revised up because consumers spent more than first thought, and businesses cut spending by much less. Imports rose by a smaller amount.
The report also showed that incomes rose in the second half of last year by more than previously estimated. Americans saved more, too.
Why higher oil and gas prices are good news
Much of the growth in the fourth quarter was driven by companies restocking their shelves. Many had cut their inventories over the summer, when they thought the economy was on the verge of a recession.
That didn't happen. In fact, the economy has steadily improved since then. Still, companies likely scaled back the pace of their restocking at the start of the year to match the pace of consumer spending. That should slow growth in the current quarter.
Economists predict growth at an annual pace of 2 percent in the January-March quarter, according to a survey by the National Association of Business Economics. Growth will reach 2.4 percent for the full year, up from 2011's increase of 1.7 percent, the survey found.
A host of recent data has made many analysts more optimistic about this year's prospects. Companies have stepped up hiring, pushing the unemployment rate down for five straight months to 8.3 percent.
U.S. factories boosted output last month and December was their strongest month of growth in five years. Consumer confidence rose to its highest point in a year this month, the Conference Board reported Tuesday. That could signal Americans are ready to step up spending, which would fuel more growth. Consumer spending accounts for 70 percent of economic activity.
Some trends likely to slow growth in the current quarter are still good for consumers. The warm winter weather will likely mean Americans won't have to spend as much to heat their homes. But that technically will lower the economy's growth rate.
The economy was held back in the fourth quarter by a big drop in government defense spending. Defense spending is unlikely to be much of a factor in the current quarter, economists say.
Growth could be slowed or even derailed this year by rising gas prices, which have jumped 30 cents in the past month. That forces consumers to spend more for the same amount of gas and leaves less money for other purchases. A sharp rise in gas prices early last year choked off growth after companies began the year with a burst of hiring.
But so far, the increase isn't enough to cause a repeat of last year's disappointment, economists say. With hiring accelerating and incomes higher, consumers are better able to afford higher prices at the pump.
And the prices of other goods also jumped last year, particularly food, as well as other energy sources such as natural gas. But natural gas costs have plummeted recently while food prices are rising at a much slower pace. Those trends should offset some of the squeeze on spending from pricier gas.
The government makes three estimates of the gross domestic product for each quarter. The GDP is the economy's total output of goods and services and includes everything from autos to utility output to haircuts. Each revision is based on more complete economic data.
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The declining rate of mortgage defaults is the biggest contributor to the economic growth. This is definitely opening the door to a rising US Dollar value and will lower the cost of oil and keep inflation levels down.
There is no doubt that if TARP legislation had not passed, the middle class of this country would have been decimated and capitalism would have acquired an unrecognizable form for the majority in this country.
The Debt to GDP ratio in this country is still staggering.
America needs to be a nation of savers and lenders, and convert away from being spenders and borrowers.
Yeah, they always talking about Obama losing, but never about their candidate. Funny ..
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It all comes back to their same goal since November of 2008 - "Get Obama outta the WHITE house"
They prove over and over again, that leading the country, protecting the country, the American People are NOT their top priorities, getting that dark skinned man outta the white house is!
When the American automotive industry was on the brink and Romney threatened to decimate it by suggesting we "let Detroit go bankrupt," President Obama refused to let it happen. The President rescued the auto industry, saving more than 1.4 million American jobs up and down the supply chain. America's carmakers are now officially back, and the industry has added 170,000 jobs in the past two and a half years.
Mitt Romney's record shows he can't be trusted—and it's clear that our fragile but strengthening economic recovery can't afford to be compromised by someone like him taking the reins.
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Mormonism? ; ) LOL
Election results for romney and sanitorium:
The GOP clown car continues over the cliff!!
good try there poet - but dreams are not reality, unless of course you are on drugs - is that your problem?"
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speaking of dreams, if the rightwingnuts are going to dream their party is resposibly for the economic growth, then you might as well dream big...Its actually funny to watch you rant and rave about the GOP crybaby-express, you certainly are delusional..congress is the bottom of the barrel when you look at the rightwing-whackos...go back to sleep...
ummm, it is actually the tea party that turned things around when they took over the house - sorry, but your misplaced optimisim for obummer is admirable :)
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hmmm........Well with the repubs in control of the House. The Dems in control of the Senate AND the Presidency - I'm afraid you'd have to give credit to the Dems for turning things around - they control 2 outta 3! : )
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all the authoritarians will have to discount and marginalize this somehow ... because accepting it means everything they believe to be truth is in fact false.
imagine your whole belief system ... the very core of all that you claim to be ... and the foundation upon which your whole being stands ... is false.
in the minds of the authoritarian in denial ... no doubt the numbers don't include 'something' ... or they do include 'something' and shouldn't ... or the report comes from a questionable source ... or the liberal media is in on the conspiracy ... or everyone's just protecting obama ... and if this was a republican they'd be trashing them.