Fourth-quarter GDP on a Major Upswing

Real gross domestic product (GDP) increased 5.7 percent in the fourth quarter of 2009 after increasing 2.2 percent in the third quarter. - Photo Courtesy of Bureau of Economic Analysis

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According to the advance estimate of gross domestic product (GDP) for the fourth quarter of 2009, real GDP rose 5.7 percent at an annual rate. This was the second consecutive advance and the strongest increase since the third quarter of 2003. “Today’s strong GDP showing represents important economic progress that must now be translated into new jobs,” Commerce Secretary Gary Locke said.

The pick up in real GDP growth reflected a slowdown in the rate at which businesses drew down inventories; while inventories were drawn down for the seventh straight quarter, the drawdown was much less than in the
third quarter. This shows signs of the economy picking up steam, although the housing market still has a long road to recovery.

The pick up also reflected a upturn in business investment, mainly due to a pick up in equipment and software. In addition, imports (a subtraction in the calculation of GDP) rose less than in the third quarter. These contributions to real GDP growth were partially offset by slowdowns in federal spending, consumer spending and residential housing. ?EUR??,,????'?????<