US economy grows at slightly faster rate in final three months
Source: Agencies |
March 1, 2012, Thursday
|
Print Edition
Print Edition
THE US economy grew at a slightly faster pace in the final three months of last year, and Americans earned more income than previously reported. That could set the stage for stronger growth this year.
The Commerce Department said yesterday that the economy rose at a 3 percent annual rate in the October-December quarter - the fastest pace since the spring of 2010. It exceeded the previous estimate of 2.8 percent. And it was better than the third quarter's 1.8 percent growth rate.
The growth estimate was revised up because consumers spent more than first thought, and businesses cut spending by much less. Imports rose by a smaller amount.
The report also showed that incomes rose in the second half of last year by more than previously estimated. Americans saved more, too.
Income growth is crucial. Economists have worried that recent gains in consumer spending weren't sustainable without more pay. Higher incomes also make it easier for Americans to pare debts.
After taxes, inflation-adjusted incomes rose 1.4 percent in the fourth quarter. That's nearly double the first estimate.
And in the third quarter, incomes rose 0.7 percent, compared with earlier estimates of a 1.9 percent drop.
The savings rate was also revised up. Americans saved 4.5 percent of their incomes in the October-December quarter. That was down from the third quarter. But it topped the previous 3.7 percent estimate for the fourth quarter.
Consumer spending rose 2.1 percent in the fourth quarter, powered by a jump in spending on autos and other long-lasting goods. That's an improvement from the third quarter. And it's much better than spending during the spring, when high gas prices nearly brought consumer spending to a standstill.
Most of the growth in the fourth quarter was driven by companies restocking their shelves. Many had cut their inventories over the summer, when they thought the economy was on the verge of a recession.
That didn't happen. In fact, the economy has steadily improved since then. Still, companies likely scaled back restocking at the start of the year.
The Commerce Department said yesterday that the economy rose at a 3 percent annual rate in the October-December quarter - the fastest pace since the spring of 2010. It exceeded the previous estimate of 2.8 percent. And it was better than the third quarter's 1.8 percent growth rate.
The growth estimate was revised up because consumers spent more than first thought, and businesses cut spending by much less. Imports rose by a smaller amount.
The report also showed that incomes rose in the second half of last year by more than previously estimated. Americans saved more, too.
Income growth is crucial. Economists have worried that recent gains in consumer spending weren't sustainable without more pay. Higher incomes also make it easier for Americans to pare debts.
After taxes, inflation-adjusted incomes rose 1.4 percent in the fourth quarter. That's nearly double the first estimate.
And in the third quarter, incomes rose 0.7 percent, compared with earlier estimates of a 1.9 percent drop.
The savings rate was also revised up. Americans saved 4.5 percent of their incomes in the October-December quarter. That was down from the third quarter. But it topped the previous 3.7 percent estimate for the fourth quarter.
Consumer spending rose 2.1 percent in the fourth quarter, powered by a jump in spending on autos and other long-lasting goods. That's an improvement from the third quarter. And it's much better than spending during the spring, when high gas prices nearly brought consumer spending to a standstill.
Most of the growth in the fourth quarter was driven by companies restocking their shelves. Many had cut their inventories over the summer, when they thought the economy was on the verge of a recession.
That didn't happen. In fact, the economy has steadily improved since then. Still, companies likely scaled back restocking at the start of the year.
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