The Bureau of Economic Analysis has announced the estimate of Gross Domestic Product for the final quarter of last year:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 5.7 percent in the fourth quarter of 2009, (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.2 percent.
The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 26, 2010.
The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, exports, and personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an upturn in nonresidential fixed investment that were partly offset by decelerations in federal government spending and in PCE.
Motor vehicle output added 0.61 percentage point to the fourth-quarter change in real GDP after adding 1.45 percentage points to the third-quarter change. Final sales of computers subtracted 0.03 percentage point from the fourth-quarter change in real GDP after subtracting 0.08 percentage point from the third-quarter change.
There’s a cup half empty and a cup half full way to view these figures.
The good news is that 5.7% is a very solid growth rate, an expanding economy is better than a contracting one, and things, e.g. motor vehicles, that were subsidized did well. The bad news is that things that weren’t subsidized, e.g. computers, contracted, which still shows weakness. I should also point out that strong growth in the face of declining employment indicates rising productivity. As long as productivity is rising, outputs are increasing, and the future is as uncertain as it is will we see an increase in employment?
The Washington Post makes a good point in noting that the increase in exports exceeded the increase in imports. That may go some way to explain President Obama’s statements about increasing exports in the SOTU message.
Fox notes that the economy has expanded now for two consecutive quarters:
The economy grew for a second straight quarter from October through December, posting a 5.7 percent annual rate, the fastest pace since the third quarter of 2003.
The Commerce Department report is the strongest evidence to date that the worst recession since the 1930s ended last year, though an academic panel that dates recessions has yet to officially declare an end to it.
The two straight quarters of growth last year followed a record four quarters of economic decline. Still, the growth at the end of last year was primarily fueled by companies refilling depleted stockpiles, a trend that will soon fade.
Bloomberg points out that inflation is holding steady and considers this about employment:
Jobs is one area where a rebound is still not evident. Payrolls fell by 85,000 last month after a 4,000 gain in November that was the first increase in almost two years. The U.S. has lost 7.2 million since the start of the recession in December 2007, the most of any slowdown in the post-World War II era.
The jobless rate held at 10 percent in December, the Labor Department said on Jan. 8. A jump in the number of discouraged workers leaving the labor market kept the rate from rising.
President Barack Obama this week said job creation will be the “number one focus in 2010.” Speaking during his first State of the Union address, Obama called on Congress to deliver a new jobs bill to his desk.
Is it possible to sustain a robust recovery without an increase in employment?