U.S. Economy Accelerates on Gains in Consumer Spending, Exports

[Godhumor]

Source: Bloomberg

The U.S. economy accelerated in the fourth quarter of 2010, driven by the biggest gain in consumer spending in more than four years and rising exports.

Gross domestic product climbed at a 3.2 percent annual pace from October through December, falling short of the 3.5 percent median forecast of 85 economists surveyed by Bloomberg News and restrained by the biggest drag from inventories in two decades, Commerce Department figures showed today in Washington. Final sales, which includes all categories except stockpiles, rose at a 7.1 percent pace, the most since 1984.

“The recovery is getting stronger and will soon become self-sustaining as job growth picks up and the expansion becomes more balanced,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report.

...

For all of 2010, the world’s largest economy expanded 2.9 percent, the most in five years, after shrinking 2.6 percent in 2009. The median forecast of 59 economists surveyed a year ago projected the U.S. would expand 2.7 percent.

Read more: http://noir.bloomberg.com/apps/news?pid=20601087&sid=a1IJXhnVsd04&pos=1

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Better and better.

[fasttense]

1. The GDP rose during the Great Depression too.

In fact for 6 years of the Great Depression GDP rose.

And then FDR tried to balance the budget and GDP dropped.

[DCBob]

4. But the worst of it was over.. the second dip was minor compared to initial collapse..

Who knows what the future may bring but clearly we are at least heading in the right direction.. GDP wise.

[Downwinder]

2. Based upon devalued dollars?

[Godhumor]

3. For domestic household spending, dollar value doesn't matter

For pretty much everyone who lives in the country a dollar = a dollar, and, since 70% of the GDP is driven by household spending, it is not a major factor (And again, even for US based companies who ship out exports a dollar is still a dollar. If a weaker dollar leads to $45 billion in international sale, companies will take that every time. Hell, it is why Japan, for many years, tried to keep the yen weak.).

From the OP article, a one sentence excerpt on consumer spending:

"Stock-market gains, reduced debt and gradual improvement in the labor market are giving consumers the confidence to shop."

[sabra]

5. Economy Grows at 3.2% Pace, Pushed Up by Sales Spike

Source: CNBC/Reuters

The U.S. economy gathered speed in the fourth quarter with a big gain in consumer spending and strong exports pushing demand ahead at the fastest clip in more than 26 years.

The economy grew at a solid 3.2 percent annual rate in the final three months of 2010, but it would have risen at a 7.1 percent rate if businesses had not put the brakes on rising inventories, the Commerce Department said Friday.

It was the largest rise in final demand since the second quarter of 1984.

"The conclusion is the economy appears to be self-sustaining," said Fred Dickson, chief market strategist at The Davidson Cos in Lake Oswego, Oregon.

Economists had expected GDP to rise at a 3.5 percent rate after expanding at a 2.6 percent pace in the third quarter, but the composition of growth gave the report a robust tenor.

Read more: http://www.cnbc.com/id/41309932

[dkf]

6. Well the fed should be happy.

Looks like qe2 is working.

[indimuse]

7. CNBC/Reuters =OWNED by Corporate MASTERS != LIES!

just sayin..

[dmallind]

8. For the love of Koresh please say you missed the dripping red icon

or considered it redundant. Lately on DU it's hard to tell but still....

[pampango]

9. With the stimulus' effects fading and housing still in the tank, we'll see if this continues.

Nice about consumers and exports, though.

http://www.latimes.com/business/la-fi-gdp-report-20110129,0,2121171.story

"Economic performance in the latest fourth quarter was boosted by strong personal spending, reflected in the best holiday retail sales since 2006 as consumers felt more confident and made purchases that they had put off during the recession.

U.S. exports also accelerated while the rate of import growth slowed. Company investments also helped the economy, although business spending for equipment and software slowed at the end of 2010.

The fourth-quarter GDP would have been much higher were it not for a falloff in government spending and private inventories – both of which had stimulated growth in prior quarters. But the benefits from the federal economic stimulus passed in early 2009 have faded, and companies did not beef up inventories of goods as much as before when they were rebuilding stock after the recession."

[Godhumor]

10. Recovery is nearing or all ready at self-sustainable levels

So the simulus run-down might show up as a short-term blip but probably not long-term.

Housing will be a mess until prices are actually in line with where they are historically supposed to be and stay there for a sustained period of time. This will be an awful year for repurchases once the fed increases rates and may very well affect total originations, as well.