It has been reported that the U.S economy growth has been enhanced after a severely devastating period of recession. The economic growth of U.S gained acceleration in the last three months of previous year 2011. The rate for this increase is 3.2% or correspondingly a 0.78% quarterly increase. This rate is compared to the annual GDP rate. The annual GDP rate is 2.6%. This was reported by the commerce department in the preceding quarter.
The rise in consumer expenditure helped to increase the growth thereby falling imports. The wages also experienced an increase. The Labor Department told that the wages in 2010 were increasing at a faster rate of 2% than the year 2009. But an interesting fact is that the rate is still the second slowest ever since the records began. The Labor department has been recording such a data for almost 28 years.
The GDP of the 4th quarter can help estimate the future growth and can be revised to become certain about other facts. As a whole, the U.S economy grew by 2.9% in 2010. This growth is the largest one since 2005. The consumer spending growth of 4.4% has helped the U.S a lot since this consumer spending corresponds to two third of the U.S economic activity.
Ryan Sweet at Moody’s Analytics said that U.S still needs an even stronger growth. This will in turn help to reduce the unemployment rate. Ryan Sweet further added that currently we are only creating jobs to stabilize the unemployment rate.
Home building also played a role in this economic growth contributing a 3.4% share. The rise in inventories could not replace the sold products. On the other side the rise in consumer spending was contributing a lot to the economy. But combinations of certain considerations have posed questions for U.S. The combination of little growth in wages and increase in consumer spending pose a question.
Jim Vogel at FTN Financial in Tennessee said that the traders have to cater up the largest than expected consumption number. He also said that they will have to determine the source of funding for such a jump. Apart from all these perspectives, the GDP report also explains inflation figure.
The statistics show that Personal Consumption Expenditures (PCE) index reflects the increases in fuel and food commodities prices. The PCE index was recorded at a low level of 0.4%. This recorded PCE index does not include fuel and food. Though U.S is trying hard to fight recession, but it is time that will decide the fate of such an effort.
