Wednesday, February 2, 2011

U.S. Economy Grew 3.2% In Q4

Spurred by consumer spending and strong exports, the U.S. gross domestic product (GDP) rose 3.2% in the fourth quarter of 2010 and would have expanded further if not for lagging business inventories, the Commerce Department said. In total last year, the GDP rose 2.9%, marking the biggest gain since 2005. By comparison, in 2009, the U.S. economy shrunk by 2.6%. Separately, ASI announced last week that the ad specialty market grew by 9.1% in 2010, with a distributor revenue increase of 9.3% for the fourth quarter. In total, distributor sales reached $17.4 billion last year.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased by 4.4% in the fourth quarter, adding three percentage points to GDP growth. A rise in exports narrowed the trade deficit and also added nearly 3.5 percentage points to the GDP, the largest boost since 1980. Business inventories however, which had driven an economic rebound since the middle of 2009, actually subtracted from the GDP. Inventories increased by only $7.2 billion in the fourth quarter after a $121.4 billion rise in the third quarter.
Despite the gains in GDP, the Federal Reserve has reiterated its commitment to a $600 billion stimulus effort through the purchase of government bonds, hoping to lower the 9.4% unemployment rate. Federal officials are now also concerned about a rise in the personal consumption expenditures price index, which jumped nearly 2% in the fourth quarter of 2010. The rise in the index reflects an increase in food and gas prices.
Separate from the Commerce Department report, a new Thomson Reuters/University of Michigan survey shows consumer sentiment improved at the close of January, after initially dipping at the start of 2011. The survey's gauge of consumer expectations rose to 69.3, reaching its highest level since June of last year.

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