Economic Growth Accelerated in Fourth Quarter
The United States economy grew at its fastest pace in over six years at the end of 2009, but a sluggish job market is still souring economists on the sustainability of the recovery.
Gross domestic product expanded at an annual rate of 5.7 percent in the fourth quarter, well above analysts’ expectations. It had grown at an annualized rate of 2.2 percent in the previous quarter.
The biggest lift to economic activity came because businesses ran down their stockrooms at a much slower rate than they had earlier in the year.
Slower inventory depletion is not the most promising way to guarantee growth going forward, but economists are hoping that once companies become more confident about the recovery, they may ramp up production to refill their bare stockroom shelves.
Consumer spending and exports have also grown, but the pace has been disappointing to many economists, given the trends in previous recoveries.
The biggest challenge is the job market, economists say.
On net, the economy lost 208,000 nonfarm payroll jobs last quarter. As long as the labor market remains weak, consumers — whose purchases makes up the bulk of economic output each quarter — will be reluctant to spend money. That means businesses will need to look for other sources of demand, like exports.