Saturday, January 29, 2011

3.2% Consumer-Driven Economic Growth Not Enough to Buoy Employment

James Picerno submits:

U.S. economic growth picked up speed in last year’s fourth quarter, the Bureau of Economic Analysis reports. But the 3.2% pace of annualized real growth was below economists' 3.6% consensus forecast. Still, a 3.2% gain for GDP represents a substantial acceleration from the third quarter’s 2.6% rise.

Much of the increase in growth in last year’s three months is due to a higher rate of consumer spending, which represents more than two-thirds of GDP. Personal consumption expenditures rose by a real annualized 4.4% in Q4:2010, up sharply from 2.4% in Q3:2010. Notably, consumer spending in the cyclically sensitive durable goods sector rose by even more, surging 21.6% in 2010’s fourth quarter, well above the 7.6% pace in Q3. That's the biggest quarterly rise for durable goods spending in nine years.


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