US GDP Up But Below Expectations As Recession Continues
by Hiland Doolittle
The U.S. Commerce Department’s final 4th quarter report indicated the U.S. Gross Domestic Product grew at a 5.6 percent annual rate. The significant gain was the highest level since the third quarter of 2003, but also below original projections of 5.9 percent growth.
The total goods and services output in the U.S. rose 2.2 percent in the 3rd quarter. The report also said that after-tax profits rose 6.5 percent in the fourth quarter 2009, down from a 12.9 percent increase in the third quarter. During 2009, tax profits declined 6.9 percent, the biggest loss since 2000.
Downward revisions to the business investment, consumer spending and inventories contributed to the revised figures. Richard DeKasker of Woodley Park Research in Washington explained, “This makes inventories leaner, which implies it could create conditions for stronger orders and restocking going forward. We are already seeing that in the first quarter. I expect a modest upward revision in the first quarter growth.” It appears that businesses have finally pared their inventories to renewable levels.
Business inventories decreased by $19.7 billion in the fourth quarter up from $16.9 billion in the third quarter. The bottom line is that the economy shrunk by 2.4 percent in 2009. This is the largest decline since 1946. Analysts are projecting GDP growth to settle at about 3.5 percent in 2010. U.S. equity markets did not react to the 2009 revisions. On Wall Street, the focus remains on housing and unemployment and the Obama Administration announced revisions to its underutilized $17 billion home loan modification program to help stabilize the marketplace.
Tags: GDP, housing, US Unemployment
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
