Final results for economic growth for fourth quarter 2009 are in. The economy grew 5.6% - down slightly from the first two estimates of 5.7% and 5.9% growth. Most of this increase - in fact, 3.79% - was from businesses as they restocked low inventory. This is to be expected at this stage of the business cycle for an economy coming out of a recession. (Source: Bureau of Labor Statistics Q4 GDP Report)
So, how much did the economy really grow last quarter? Subtract 3.79% from 5.6% to get the answer - 1.8%.
Econo-blogger Calculated Risk points out that:
Changes in private inventories are transitory (only lasts a few quarters at the start of a recovery).
He goes on to note that spending on personal consumption and residential investment were both revised down in Q4.
What It Means to You
Even a 1.8% growth rate means the economy is technically out of recession. Recessions are usually defined by two consecutive quarters of negative GDP growth. Job losses will continue, however, since growth needs to be 3% or more for businesses to add jobs. For a history of all GDP reports since 2007, see GDP Current Statistics. (Source: GDP News Release)
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