The United States economy continued to expand modestly toward the end of 2011. The Commerce Department says it grew at an annual rate of 2.8 percent in the fourth quarter and 1.7 in all of 2011.
This means that the economy has expanded for the last two years, after a 3.5 percent decline in 2009. The economy did slow down in 2011. It grew 3 percent in 2010.
The Commerce Department explains:
"The increase in real GDP in 2011 primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by negative contributions from state and local government spending, private inventory investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
"The deceleration in real GDP in 2011 primarily reflected downturns in private inventory investment and in federal government spending and a deceleration in exports that were partly offset by a deceleration in imports and an acceleration in nonresidential fixed investment."
Economists were expecting a 3 percent growth in the fourth quarter.
Update at 8:53 a.m. ET. Even Modest Expansion Is A Relief:
The New York Times frames today's numbers by saying that just last summer, economists were questioning whether the U.S. would slip back into recession.
So, even though a 2.8 percent growth is lower than expected, it's still a relief. The Times reports that the question is now is whether the U.S. economy can keep gathering steam.
"Among the more optimistic signs, many American companies have reported strong profits in recent months, as well as a few indications that the trend will continue. New orders for manufactured durable goods, reported on Thursday, exceeded economists' expectations in December by growing 3 percent.
"And individual companies like General Electric and Lockheed Martin closed the year with record order backlogs, a sign that, at least for some businesses, demand is so strong that they cannot produce quickly enough. The backlogs portend solid manufacturing growth going forward, and suggest to some economists that the United States could weather the euro crisis relatively unscathed after all."
Very little of this, however, is consolation to American workers. The unemployment rate is still stubbornly high and, as the Times points out, the American economy is back to its pre-recession level, except it's doing it with 6 million fewer jobs.
Update at 8:43 a.m. ET. An Acceleration In Fourth Quarter:
The Wall Street Journal reports that fourth quarter figure is the best the country has seen in more than a year and a half and that signals "a sturdier recovery took hold despite troubles in other parts of the world."
The Journal adds: "Now, the question is whether the momentum in the fourth quarter will simply be another blip in a recovery marked by fitful starts, or whether it marks a stronger phase of the recovery."