U.S. Economy Grew 5.7pct in the Fourth Quarter

[engine]

U.S. Economy Grew 5.7pct in the Fourth Quarter [reuters.com]

The economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years, as businesses made less-aggressive cuts to inventories and stepped up spending.The robust performance closed out a year in which the economy contracted 2.4 percent, the biggest decline since 1946.

After falling off a cliff at the start of the year, gross domestic product turned higher in the third quarter, and the quickening fourth-quarter pace reported by the Commerce Department on Friday suggested a sustainable recovery was building.

But even stripping out inventories, the economy expanded at an annual rate of 2.2 percent, accelerating from the 1.5 percent increase in the third quarter, reflecting relatively strong performance from other segments of the economy.

Green shoots?

[Rugles]

This is really good news. Its a welcome relief from the endless negative economic yapping from the anti-Prez side of the political spectrum. All that negative stuff has a real effect on peoples perception of the economy. Luckily reality is winning the day and hopefully people (who are still employed) will feel secure enough to pull the trigger on large purchases. Further enhancing the apparently robust recovery.

[HRoth]

Well, this sounds like manipulated stats to me. All I have to do is look around at what is going on in my state.

I do think the effect of fear on the retail part of the economy is strong. People are still afraid. Example: Last year, sales of vegetable seeds were up 40%. Suppliers of seed envelopes ran out for the first time in 30 years. This year, a lot of places are already running out of seeds. Although I've been gardening so long I buy my seeds in November, most people don't buy until May. To see companies running out of seeds now is just incredible and reflects the fear that people have that springs out of a general feeling of doom. I can't believe how many of my customers are bringing doom up to me when they call about something. They are afraid not only that the economy is going to get worse but that things are going to totally fall apart. Last year I had a few like that. This year it is common with my callers. "I feel like I need to prepare, the way things are going."

And I don't think this fear is just a product of media manipulation. There is so much unemployment now that everyone knows someone who has lost his/her job.

[dickbaker]

From the articles I've read, the biggest factor in the jump in GDP has been government spending. Take that out of the equation and there's no growth.

[Rugles]

The guv spending is priming the pump, that is the way Keynsian economics works. You were in a very deep hole, the recovery will take time, be patient.

see this in todays news:

Factory activity fueling modest economic recovery
Factory activity hits highest point since 2004, but construction and income data remain weak

NEW YORK (AP) -- Hopes that America's factories will help drive the economic recovery gained support Monday from news that manufacturing activity grew in January to its strongest point since 2004.

Other data, though, offered a reminder that the recovery remains fragile. Construction spending sank in December to its lowest level in more than six years. And gains in personal income and spending were too modest in December to suggest that consumers can fuel a strong rebound.

"Right now we're getting a recovery," said Michael Gregory of BMO Capital Markets. "But you have to be skeptical. This kind of performance cannot be sustained unless we get those other areas that are still weak in the economy to contribute to growth -- housing, construction, real consumer spending."

This doom and gloom will end with the continued good news sprinkled around.

added, here is the link
[finance.yahoo.com...]

[ChrisE]

I've been thinking recovery would take another year or two, but it looks like I'm wrong. . . probably much much longer. If we can sustain the 5% economic growth, then we'll drop unemployment by 1% each year according to this article.

[finance.yahoo.com...]

[Rugles]

Some people are referring to this as the "Great Recession". While that may be a little of an exageration, this could be the worst recession in my lifetime but that remains to be seen.

This is my 4th recession since I joined the workforce, I can tell you that jobs are always the last thing that comes back. I do not expect this recession to be any different. I am in Canada, the recession actually ended for us a year ago. I am only now hearing about hirings locally.

[ytswy]

For comparison, Britain's GDP grew 0.1% in Q4 '09 :(

Any of you rich North Americans want to buy something?

[Rugles]

Sure, send over some fish and chips and a pint of lager (I am in North America, so please make sure the pint is frosty cold ;-) ) and a copy of todays Sun.

[ytswy]

How about some Sterling? - the Bank of England has an unlimited supply...

Edit: Akk, I'm starting to sound like a commenter on the Daily Mail message boards (we're doomed, dooomed, DOOOOMED I tell you). Great news on the US GDP figures, that can only be good for the rest of us.

[dickbaker]

I'm not 100% comfortable arguing economics, and I don't want to have my post deleted for political reasons, so I'll try to be non-partisan.

The guv spending is priming the pump, that is the way Keynsian economics works.

If you believe in Keynsian economics, then what do you think will be the effect of this administration allowing the Bush tax cuts to expire next year, which will increase tax rates across the board?

I'm not sold on the notion that this economy is coming back soon. If the Lutz (sp?) theory really holds true, it would be very difficult for the US economy to sustain 5% growth long enough to get unemployment down to 5% or less.

[dpd1]

You're right Rugles... Obviously people have to buy stuff first before there's a reason to hire people again. And that's going to be a delayed reaction while businesses play it safe. They're not going to race out and hire people one week after sales bump up. So that's why the whole unemployment thing isn't the end all tell all for the overall health of things. I personally ignore it all and just keep plowing ahead. The big business guys are not sitting their paralyzed with fear each day... They do what they can, chalk it up and move on. That's really all you can do.

[Rugles]

Keysian economics have nothing to do with tax cuts.

What you are supposed to do, is save (surplus) during economic expansion and spend (deficit) during economic recession. Its to balance out the peaks and valleys of the economic cycle.

I am not going to get into blaming who or how you got to this point.