Source: Bureau of Economic Analysis
The gross domestic product of the U.S. rose at an annual rate of 5.7 percent for the last quarter of 2009 — the largest increase since the third quarter of 2003.
A big part of the boost came from private companies stepping up to rebuild their inventories. The Commerce Department says the change in private inventories added 3.39 percentage points to the fourth-quarter change in real GDP. In the third quarter, the change in inventories only accounted for 0.69 percentage point. Businesses made massive reductions to inventories earlier this year to account for slower sales, but now they are starting to rebuild their stockpiles. The decrease in inventories this quarter was only $33.5 billion, about a quarter of what it was for the third part of 2009.
GDP minus the change in private inventories — increased 2.2 percent in the fourth quarter. The fact that the boost was so largely dependent on inventories has some economists wondering how the strong the recovery really is. From MarketWatch:
"Since the boost from inventories is temporary, the GDP data will likely overstate the underlying strength of the recovery," noted economists at Moody's Economy.com.
Leaving inventories aside, the report today noted significant increases in equipment and software purchases, a sign that business investment is growing. Total business investment is up 2.9 percent over the last three months.
The latest data also gives some indication of how the U.S. consumer is feeling. Consumer spending, rose at a pace of 2 percent, after a 2.8 percent increase in the previous three months.