GDP Growth Shows Sustainable Recovery

The U.S. economy picked up steam in the fourth quarter of 2010, but growth fell short of economists’ expectations.

U.S. gross domestic product picked up an estimated 3.2 percent after inflation, U.S. Commerce Department figures released this morning show. Economists had been expecting an increase of about 3.5 percent. The economy grew 2.6 percent in the third quarter.

Still, for all of 2010, the economy grew at a 2.9 percent rate, the best year since 2005, and a clear indicator that Treasury Secretary Timothy Geithner was right when he told business and political leaders gathered at the World Economic Forum in Davos, Switzerland, that U.S. economic recovery was “sustainable.”

The Commerce Department attributed the fourth-quarter growth to increases in personal spending and exports.

Personal expenditures and consumption grew 4.4 percent in the fourth quarter—the fastest pace since the fourth quarter of 2006—compared with a growth rate of 2.4 percent in the third. That’s a good sign, since much of the recovery previously had been attributable to government stimulus measures.

Exports increased 8.5 percent, while imports decreased 13.6 percent.

While this morning’s report was solid, though, the economy still isn’t growing fast enough to address the top issue: creating enough jobs to replace those lost in the Great Recession.

"Unfortunately, we still need to see much stronger growth to begin to really make a dent in the unemployment rate. Right now we are just barely creating enough jobs to stabilize the unemployment rate," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters before the data was released.

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