US grows 3.1% at end of 2010
By Martin Crutsinger |
March 26, 2011, Saturday
|
Print Edition
Print Edition
THE United States economy grew a little faster at the end of 2010 than the government had previously estimated, boosted by more inventory building and business investment in plants and equipment.
But rising oil prices will likely limit growth this year.
The economy, as measured by the gross domestic product, grew at an annual rate of 3.1 percent in the October-December quarter, the US Commerce Department reported yesterday. That represents an upward revision from last month's 2.8 percent estimate for the same period.
The quarterly expansion was the best since the start of last year and was driven by a 4 percent growth in consumer spending, the strongest gains in four years. Consumer spending is closely watched because it accounts for 70 percent of economic activity.
But many economists said a jump in oil prices has likely cut into that spending and slowed growth in the current January-March quarter.
"Higher oil prices are going to put a bit of a squeeze on consumers," said Nariman Behravesh, chief economist at IHS Global Insight.
There is also a concern that the Japanese crisis will disrupt factory production there. That could slow activity at some US companies that rely on Japanese manufacturers for parts, especially in the American auto and electronics industries.
The new uncertainty has led many economists to trim their growth estimates for the current quarter. There is a wide range of estimates, from 2.3 percent to 3.8 percent.
Economists said growth needs to average around 5 percent for a year just to lower the current 8.9 percent jobless rate by 1 percentage point.
In the final three months of last year, residential construction grew at an annual rate of 3.3 percent after plunging at a 27.3 percent rate in the July-September quarter. However, there is concern about the prospects for housing given recent weakness in home sales and construction.
Government spending was shrinking at a rate of 1.7 percent in the final quarter of last year. State and local governments are struggling to get budget deficits under control.
But rising oil prices will likely limit growth this year.
The economy, as measured by the gross domestic product, grew at an annual rate of 3.1 percent in the October-December quarter, the US Commerce Department reported yesterday. That represents an upward revision from last month's 2.8 percent estimate for the same period.
The quarterly expansion was the best since the start of last year and was driven by a 4 percent growth in consumer spending, the strongest gains in four years. Consumer spending is closely watched because it accounts for 70 percent of economic activity.
But many economists said a jump in oil prices has likely cut into that spending and slowed growth in the current January-March quarter.
"Higher oil prices are going to put a bit of a squeeze on consumers," said Nariman Behravesh, chief economist at IHS Global Insight.
There is also a concern that the Japanese crisis will disrupt factory production there. That could slow activity at some US companies that rely on Japanese manufacturers for parts, especially in the American auto and electronics industries.
The new uncertainty has led many economists to trim their growth estimates for the current quarter. There is a wide range of estimates, from 2.3 percent to 3.8 percent.
Economists said growth needs to average around 5 percent for a year just to lower the current 8.9 percent jobless rate by 1 percentage point.
In the final three months of last year, residential construction grew at an annual rate of 3.3 percent after plunging at a 27.3 percent rate in the July-September quarter. However, there is concern about the prospects for housing given recent weakness in home sales and construction.
Government spending was shrinking at a rate of 1.7 percent in the final quarter of last year. State and local governments are struggling to get budget deficits under control.
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