GDP growth rate of 2.8% for 4Q
Higher readings on private inventory investment, consumer spending and and residential investment led the Commerce Department to estimate the gross domestic product growth rate at 2.8% for the final three months of 2011. Third-quarter GDP growth was 1.8% and the economy rose at a rate of 1.3% in the second quarter. The Bureau of Economic Analysis said fourth-quarter GDP growth was hindered by decreased government spending and increased imports. Nonresidential fixed investment rose 1.7% in the fourth quarter, compared with a 15.7% increase the prior quarter, according to the BEA. And residential investment climbed 10.9% from a 1.3% gain in the third quarter. Analysts polled by Econoday projected GDP growth of 3.1% for the fourth quarter with a range of estimates between 2.7% and 3.6%. Paul Ashworth, chief U.S. economist at Capital Economics, said the acceleration of GDP growth "suggest the recovery is gathering momentum." "However, the much bigger-than-expected positive contribution from inventories in (the fourth quarter) leaves us even more convinced that growth will slow again to a sub-2% rate" in the first quarter of 2012, Ashworth said."Overall, the pick up in growth doesn't look half as good when you realize that most of it was due to inventory accumulation." For 2011, GDP rose 1.7% after increasing 3% in 2010, according to the BEA. Continued declines in local, state and federal government spending curtailed economic growth last year. Estimates for 2012 GDP growth remain contingent upon European debt concerns and the uncertain political environment of a presidential election year. Mark Zandi, chief economist for Moody's Analytics, expects GDP of 2.6% this year, while at least one firm anticipates continued deleveraging across global markets through at least 2018. Simon Hunt Strategic Services, based in Surrey, England, also expects the United States to slip into another recession either in 2012 or 2013. The Federal Reserve predicts GDP growth of 2.5% to 2.9% for 2012, with growth of 3% to 3.5% in 2013 and between 3% and 3.9% the following year. The estimates for 2012 and 2013 are down from previous projections. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.