Thursday, March 29, 2012

GDP Grew at 3.0% in the Fourth Quarter

Real GDP expanded at 2.95 % in the final quarter of 2011 according to the BEA’s final estimate, released this morning. This reading is essentially unchanged from the 2.98% reported in the second estimate. GDP accelerated in the fourth quarter, from an annual pace of 1.8% in the third quarter.

The acceleration in growth seen in the fourth quarter was due primarily to private inventory investment, which presented a sizable drag on growth in the third quarter, but contributed 1.8% of the growth in the fourth quarter. This is a negative sign for first quarter 2012 growth, as inventory growth is not seen as sustainable.

Fourth quarter growth was also aided by an increase in consumption. Growth in fixed investment slowed in the fourth quarter, contributing about 1% less to growth than the previous quarter. Net exports became a drag on growth in the fourth quarter as global demand slowed. Fiscal drag was larger than the previous three months as well.

Read the report.

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