About a month ago, preliminary reports showed the U.S. economy grew at an annualized rate of 2.8% in the fourth quarter. The GDP numbers weren't bad, necessarily, but they fell short of expectations.
The revised data, published this morning, brought more encouraging news.
The United States economy grew at a slightly faster pace in the final three months of last year, and Americans earned more income than previously reported. That could set the stage for stronger growth this year.The Commerce Department said the economy expanded at a 3 percent annual rate in the October-December quarter.... The growth estimate was revised upward because consumers spent more than first thought, and businesses cut spending by much less. Imports rose by a smaller amount.The report also showed that incomes rose in the second half of last year by more than previously estimated. Americans saved more, too.
The fourth quarter of 2011 was easily the best three-month period of the calendar year, and the strongest the U.S. economy has seen since the spring and early summer of 2010.
It's important to realize, though, that 3% growth is hardly a breakthrough or evidence of a robust recovery. Under normal conditions, a figure like this would suggest the economy was fairly healthy and growing at a steady pace, but therein lies the point: these are not normal conditions. Given the severity of the Great Recession, and how much ground there is to make up, we'd much prefer to see a significantly higher number.
This should be of particular interest to policymakers, who may be tempted to see stronger growth as an excuse for inaction -- or worse, austerity measures intended to slow the economy down on purpose. The fact remains that we're slowly crawling out of a ditch, and taking money out of the economy and ignoring high unemployment may very well push us backwards. This is especially true in light of the ongoing risks posed by outside economic forces beyond the nation's control.
With that, here's a chart showing GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.