The American economy ended a year of mostly disappointments with modestly
stronger growth, but still less than what was hoped for by many
analysts.
The nation’s gross domestic product — the total value of goods
and services produced in the U.S. — rose 2.8% in the fourth quarter from the
prior quarter, the Commerce Department reported Friday.
While that was an
acceleration from the feeble growth rate of 1.8% in the summer, the latest GDP
figure was below the 3% that most analysts were projecting. The final quarter of
2011 got a big lift from businesses increasing their stockpile of goods, but a
buildup of inventory at year’s end is likely to hold down growth this
quarter.
The fourth quarter also saw a pickup in consumer spending as
people bought more cars and household furnishings. But spending on services was
weak. Cutbacks by government, especially at state and local levels, slower
business investments and a bigger trade deficit dragged down the economy at
year’s end.
With the fourth-quarter data, GDP for all of 2011 expanded at
a 1.7% rate — a pace too weak for employers to add enough jobs to keep up with
the workforce population and productivity gains. Most analysts see the GDP
growth rate retreating early this year to about 2%.
Consumer spending accounts for about 70% of the American economy. Despite strong spending early in the holiday season, retail sales weakened in the waning weeks of last year. The housing market shows signs of bottoming, but unless job growth accelerates, many families’ spending capacity is limited by high debts and weak income growth.
Earlier this week the Federal
Reserve projected the GDP to advance at a rate of 2.2% to 2.7% in 2012. The
unemployment rate, currently at 8.5%, was seen as showing little if any
improvement at the end of the year.
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