27 January 2012 14:43 [Source: ICIS news]
WASHINGTON (ICIS)--The US economy grew at an annual rate of 2.8% in the fourth quarter of 2011, the Department of Commerce said on Friday, an improvement over the third quarter’s 1.8% rate of expansion.
For the full year, the department reported that the nation’s GDP grew at an anaemic 1.7%, only half as much as the 3% growth in GDP recorded for 2010.
For the first half of 2010, the US was still in recession. The recession ended in June of that year and the economy began a slow recovery that remains modest.
The full-year GDP for 2011 was dragged down by a particularly poor first quarter GDP rate of only 0.4% (annualised), followed by a 1.3% expansion in the second quarter and 1.8% growth in the third.
The fourth quarter’s 2.8% GDP growth was driven by inventory investments, consumer spending, exports and commercial real estate.
But those gains were in part offset by declines in government spending at the federal, state and local levels and an increase in imports. Increased imports count as a negative in GDP calculations.
The fourth-quarter growth pace of 2.8% was driven chiefly by consumer spending – what the department calls personal consumption expenditures (PCE) – and strong growth in sales of durable goods.
The department said consumer spending grew by 2% in the fourth quarter, compared with an increase of 1.7% in the third quarter.
Durable goods shot up by nearly 15% in the last three months of the year, more than doubling the 5.7% gain recorded for the third quarter.
While the fourth quarter’s 2.8% GDP expansion rate is a marked improvement from the third quarter, that pace is still below what economists call trend growth, which in a normal US economy would be 3– 3.5%.
That below-trend pace of 2.8% also is too modest to make any serious headway against the nation’s unemployment rate, which is still high, at around 8.5%.
Paul Hodges studies key influencers shaping the chemical industry on the Chemicals and the Economy blog
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