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Kimberly Amadeo

Economy Growing at Healthy 3% Rate

By March 29, 2012

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The BEA left its estimate for GDP growth at 3%  for the fourth quarter (October-December) of 2011.  The stock market declined, since analysts were hoping for a slight increase to 3.2%. However, this was the fastest growth since the second quarter of 2010. Furthermore,  it's at the high end of the healthy range of 2-3%.

The growth was attributable to increases in exports, retail sales, and construction. In addition, businesses added to their inventory levels. The  BEA counts this as an addition to GDP,  even though nothing was actually sold. Retail sales were buoyed by purchases of computers and automobiles. (Source: BEA, GDP Final Estimate, March 29, 2012)

What It Means to You

The increase in retail sales is evidence of a healthy increase in consumer demand in the U.S. The increase in exports is helped by durable goods orders from emerging markets countries, such as Boeing's record aircraft sales.

Now, all attention turns to economic growth for the first quarter 2012 ( January - March). Here again, durable goods orders were higher than last year, so that bodes well for at least a continuation of the 3% growth rate. However, other sectors of the economy, such as housing, must also rebound to get the economy growing fast enough to significantly reduce the unemployment rate.

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