GDP growth in Q4: Good, not great

(MoneyWatch) 

The nation's gross domestic product -- the value of all goods and services produced -- grew at an annual rate of 2.8 percent in the fourth quarter, the fastest pace since the second quarter of 2010. The good news is that it's up from 1.8 percent in the third quarter, 1.3 percent in the second quarter and 0.4 percent in the first quarter.

The not-so-good news is that analysts were expecting 3 percent growth (some were even calling for 3.5 percent), which is why stocks opened lower after the release.

The real reason why the news is good, not great: Two-point-eight percent growth is very weak for a recovery. Some of the downbeat parts of the report include:

Business spending on capital goods was the slowest since 2009. Companies likely held back on big purchases because of the European debt crisis.

Government spending tumbled 7.3 percent. This was a turnaround from a 2.1 percent increase in Q3 and a nice way to remind those austerity fans that when the government spends less, it creates a drag on economic growth (see: UK).

Rebuilding of inventories accounted for nearly 2 percent of total growth. The restocking of inventories grew at the fastest pace since the third quarter of 2010, but restocking is temporary, which could mean a downturn in the first quarter.

Consumer spending rose 2.0 percent. Sure, it's up from 1.7 percent in Q3, but it comes at a cost to the personal savings rate, which slipped from 3.9 percent to a 3.7 percent rate in Q4.

I'll take 2.8 percent growth, especially when compared to contraction or even slower growth, but we really need to see growth above 3 percent for a few quarters in a row to create more jobs and to increase confidence in consumers and businesses.

[BellaRossi]

The whole system is way to mathematically complicated we really don't know what any of the data REALLY means.


Bella Rossi

http//:www.mforums.org

[sandiegopete]

This story does not state whether the figures are adjustged for inflation. I don't know about the rest of you but when I go to the store I notice that the price of almost everything today is higher than it was a year ago. What is the real GDP per capita?

[smittyc]

Historically yearly GDP needs to be 2% for minimal growth. Worse the positive is skewed due to certain sectors rebounding but leaving those needing jobs with still no where to go. The biggest cause is the increase in those with little education. Nationally and locally the education system is run by unions and the last few decades education has focused on social issues, not education. The results cannot be defended, our education system and the unions that run it are a failure. Our government and people spend more on education per pupil then anywhere else on the globe, the teachers unions pocket the money and blame the parents. Getting the unions out of education and evaluating on merit is the only hope for our young peoples future.

[retm-w]

So mr. education expert, we should just fire all the teachers and let clowns like you do the teaching for minimum wage no benefits. Bet you wouldn't last a day in the classroom.

[texasjustice801]

Hey, it's growth.

[realtimecoffee]

Yep, I'd rather have my head a little above water than a little below.

[hypnotoad72]

Nice turtle in the article...

Hey, is that a clandestine reference to Darwin? Or at least his soon-to-be-ex supporters? :)

[fredisalive]

the only thing that keeps the GOP in contention is the low levels of education among the electorate! Otherwise this party is toast!

[realtimecoffee]

Then wouldn't you think the NEA would do a much better job of educating?

[hypnotoad72]

They are being thrown under the bus.

"Democrats" like Obama, who seem very similar to "Republicans" like McCain, are part of "the new normal".



http://www.usnews.com/news/campaign-2008/articles/2008/03/17/where-clinton-obama-and-mccain-stand-on-immigration

http://www.washingtontimes.com/news/2008/jan/14/sen-mccain-and-illegal-immigration/

http://www.infoworld.com/t/tech-industry-analysis/clinton-mccain-and-obama-h-1b-visas-830

Reading between the lines, or into what they don't say (but based on what they do say) and they are far more similar than they are different.

[independent8]

Hey boathead--that's easy--it's because the right wing GOP has done everything possible to ruin the job market and bring down the economy...but in spite of this, Obama is succeeding!!!!

[smittyc]

If you read the European press, you will see many articles stating Sarkozy of France and Obama are both trying to put the economy in a positive light and push off the day of reckoning till after their elections. Sarkozy for the most part appears resigned to his defeat come election day as of the last few weeks. Further you only have to listen to Bank of America CEO stating that of the 13.9 million mortages Bank of America holds, 6.4 million are due to foreclosures. The CEOs statement in March 2011 brought a rebuke by Obama and the political plan is to hold off on foreclosures till after Nov elections. The five big banks by the way hold 55% of the mortgages in the U.S. and Bank of America was only talking about their own foreclosures. That means that another meltdown will hit after election and those in office wasted four years kicking the can down the road. Finally my comments are factual, this is public information that anyone can find.

[andrewjsacks]

indep8 is correct, obviously. OBAMA 2012!

[boathead1]

Nice try, but 2.8 constitutes only the fourth quarter of 2011. How convenient that this period straddles the holiday spending season. Rather than cherry picking this good quarter, how about comparing the real 2011 average GDP of 1.7% to the real 2010 GDP of 3.0%. Simple question - If the US economy is really in recovery, then why is GDP growth trending downward 43%?

[boathead1]

Nice try, but 2.8 constitutes only the fourth quarter of 2011. How convenient that this period straddles the holiday spending season. Rather than cherry picking this good quarter, how about comparing the real 2011 average GDP of 1.7% to the real 2010 GDP of 3.0%. Simple question - If the US economy is really in recovery, then why is GDP growth trending downward 43%?

[independent8]

People using terms "the liberal media," "the elite media," "the food stamp president." the "socialists," --these are FOX RIGHT WING NEWS paid bloggers!

[realtimecoffee]

Also true for people using the term "FOX RIGHT WING NEWS"???
I honestly don't believe anyone gets paid for posting on CBS threads. If they are they are overpaid, and where do I sign up.

[hypnotoad72]

realtimecoffee -

Rebuttal accepted.

Each outlet has what we call a "target market". A certain demographic.

And given FOX and Free Republic, who are more inclined to ban those that don't agree with them (regardless of how well-structured or thoughtful posts disagreeing with them are, and were politely worded and did not name-call anybody...)

See my posts below for the base definition of the media, which is anything BUT "liberal", however.

I also agree - I doubt people get paid to post on news site forums. We all do it for free...