Estimates of the pace of growth of the U.S. economy in the fourth quarter of 2011 were upwardly revised in a Commerce Department report released on Wednesday, although the overall yearly growth still lagged well behind 2010 levels.
Real gross domestic product increased at an annual rate of 3.0 percent in the fourth quarter, reflecting an upward revision from the 2.8 percent growth that was initially estimated.
The upward revision surprised economists, who had expected GDP growth to be unrevised. However, the revised 3 percent growth still fell short of the 3.1 percent growth most economists had hoped to see before the first release of GDP figures for the fourth quarter.
With the upward revision, the pace of GDP growth in the fourth quarter reflects a notable acceleration from the 1.8 percent growth seen in the third quarter.
The Commerce Department said that the stronger than previously estimated growth reflected upward revisions to non-residential fixed investment and consumer spending as well as a downward revision to imports, which are a subtraction in the calculation of GDP.
The largest contributor to the increase in consumer spending came in cellular phone services, according to the Commerce Department.
The report also showed that the overall increase in GDP was driven by increases in private inventories, consumer spending, exports, non-residential fixed investment, and residential fixed investment.
The positive contributions were partly offset by negative contributions from government spending at all levels and an increase in imports.
Computer sales remained relatively strong, contributing 0.12 percentage points to the overall GDP growth, though that level is below the 0.22 percent marked for the third quarter.
Consumer spending continued to increase in the fourth quarter, rising by 2.1 percent compared the 1.7 percent increase in the third quarter. Much of the growth was due to a 15.3 percent increase in durable goods purchases, while spending on non-durable goods edged up by 0.4 percent.
Initial estimates had put the increase in spending on durable goods at 14.8 percent, while the increase in spending non-durable goods was downwardly revised from initial estimate of 1.7 percent growth.
Federal government spending, which increased 2.1 percent in the third quarter, fell 6.9 percent in the fourth quarter, with defense spending tumbling by 12.1 percent.
Though still stark, those decreases were somewhat smaller than the 7.3 percent decrease in overall federal spending and the 12.5 percent decline in defense spending initially reported.
On a year-over-year basis, 2011 GDP increased by 1.7 percent, significantly slower than the 3 percent growth seen in 2010.
The deceleration in GDP for 2011 was primarily a result of shrinking private inventory investments, lower levels of federal spending and decreased exports. Partially offsetting those factors was an increase in nonresidential fixed investment and shrinking imports.
by RTT Staff Writer
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