US fourth-quarter 2010 GDP growth revised downward to 2.8%

25 February 2011 18:10  [Source: ICIS news]

WASHINGTON (ICIS)--The US economy did not do as well in the fourth quarter of 2010 as first thought, the Department of Commerce (DOC) said on Friday as it lowered its estimate of growth for that three-month period to an annual pace of 2.8%.

In its initial or advance report in late January on the nation’s gross domestic production (GDP) for the final quarter of 2010, the department had said that the recovering economy had expanded at an annual rate of 3.2%.

The downward revision shaves nearly a half-percentage point off the original estimate and adds further fuel to worries that the recovery, which began in June 2009 and accelerated in the last half of that year and the first quarter of 2010, has cooled.

The fourth-quarter revision also required a minor but downward revision for full-year 2010 GDP growth to 2.8% from the original 2.9% pace that the department pegged in late January.

But even that lower 2.8% GDP growth rate for 2010 was in marked contrast to the 2.6% decline in the nation’s economy during 2009.

The change in fourth-quarter growth estimates was attributed to later information showing that the US had imported more goods in the last three months of 2010 than originally estimated, while consumers and local governments had spent less than first thought.

In normal economic times, US GDP would be expected to expand at a pace of 3% to 3.5%. 

The 2010 GDP growth rate of 2.8% fell short of that normal trend line, and the lower pace of economic expansion suggested that it could take even longer for the economy to generate enough jobs to accommodate new workers entering the labour force and reduce the high unemployment rate that remains above 9%.

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By: Joe Kamalick
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