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US economy rises 5.9% in Q4
By Jeannine Aversa |
February 27, 2010, Saturday
|
Print Edition
Print Edition
THE United States economy rocketed ahead at a 5.9 percent pace in the final quarter of 2009, stronger than initially estimated. But the growth spurt isn't expected to carry over into this year.
The fresh reading on the country's economic standing, released by the US Commerce Department yesterday, was better than the government's initial estimate a month ago of 5.7 percent growth. It would mark the strongest showing in six years.
Even so, it didn't change the expectation of much slower economic activity in the current January-March quarter.
Roughly two-thirds of last quarter's growth came from a burst of manufacturing -- but not because consumer demand was especially strong. In fact, consumer spending weakened at the end of the year, even more than the government first thought.
Instead, factories were churning out goods for businesses that had let their stockpiles dwindle to save cash. If consumer spending remains lackluster as expected, that burst of manufacturing -- and its contribution to economic activity -- will fade.
The signs aren't hopeful. Consumer confidence took an unexpected dive in February. Unemployment stands at 9.7 percent. Home foreclosures are at record highs. And many Americans are still having trouble getting loans.
Forecasters at the National Association for Business Economics predict the economy will expand at only a 3 percent pace in the first quarter of this year. The next two quarters should log similar growth, they predict.
Unlike past rebounds driven by the spending of shoppers, this one is hinging more on spending by businesses and foreigners.
Stronger spending by businesses and foreigners contributed to the bump-up in economic growth in the fourth quarter. So did the fact that companies stopped slashing their stockpiles of goods. During the slump, companies cut inventories at record rates.
Businesses boosted spending on equipment and software at 18.2 percent, the fastest in nine years. Foreigners bought US-made goods and services, which propelled exports to grow 22.4 percent, the most in 13 years.
The fresh reading on the country's economic standing, released by the US Commerce Department yesterday, was better than the government's initial estimate a month ago of 5.7 percent growth. It would mark the strongest showing in six years.
Even so, it didn't change the expectation of much slower economic activity in the current January-March quarter.
Roughly two-thirds of last quarter's growth came from a burst of manufacturing -- but not because consumer demand was especially strong. In fact, consumer spending weakened at the end of the year, even more than the government first thought.
Instead, factories were churning out goods for businesses that had let their stockpiles dwindle to save cash. If consumer spending remains lackluster as expected, that burst of manufacturing -- and its contribution to economic activity -- will fade.
The signs aren't hopeful. Consumer confidence took an unexpected dive in February. Unemployment stands at 9.7 percent. Home foreclosures are at record highs. And many Americans are still having trouble getting loans.
Forecasters at the National Association for Business Economics predict the economy will expand at only a 3 percent pace in the first quarter of this year. The next two quarters should log similar growth, they predict.
Unlike past rebounds driven by the spending of shoppers, this one is hinging more on spending by businesses and foreigners.
Stronger spending by businesses and foreigners contributed to the bump-up in economic growth in the fourth quarter. So did the fact that companies stopped slashing their stockpiles of goods. During the slump, companies cut inventories at record rates.
Businesses boosted spending on equipment and software at 18.2 percent, the fastest in nine years. Foreigners bought US-made goods and services, which propelled exports to grow 22.4 percent, the most in 13 years.
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