U.S. economy growing faster, but still struggling

[No Elephants]

Source: CNN

U.S. economy growing faster, but still struggling


NEW YORK (CNNMoney) -- <snip>

Gross domestic product, the broadest measure of the nation's economic health, grew at a 2.8% annual rate in the last three months of the year, the Commerce Department said.

While that's a major improvement from 1.8% in the prior quarter, and the fastest since the second quarter of 2010, it still fell short of economists' expectations of 3.2% and sent stock futures falling.

<snip>

One reason {that economists remain cautious} is that the bulk of the growth came from just one area: businesses building up their stock of goods. Private businesses increased inventories $56 billion in the fourth quarter, following a decrease of $2 billion in the third quarter.

An increase on that front can be seen as a double-edged sword. On one hand, it can be a sign of confidence in the economy. When firms predict greater purchases in the future, they build up their inventories. On the other hand, if consumers don't end up buying as much as firms had hoped, that can be a drag on GDP.



Read more: http://money.cnn.com/2012/01/27/news/economy/gdp_growth/index.htm?hpt=hp_t3

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Why are we in this mess if economists know so much, and governments hire the best of them?

(I say this even though my extremely intelligent brother in law's degree is in macroeconomics.)