U.S. GDP Growth Accelerates (economy grows at 3.2% annualized rate in Q4-2010)

[Statistical]

U.S. economic growth accelerated in the final three months of 2010 as Americans spent more and businesses drew down inventories, suggesting the recovery may pick up speed this year.

Gross domestic product, the broadest measure of all the goods and services produced, rose at an inflation-adjusted annual rate of 3.2% in the fourth quarter, the Commerce Department said Friday in its first estimate of the measure.

The latest increase returns total output of goods and services to the level hit before the deep recession. One particularly encouraging detail in the report: Final sales -- GDP minus the change in business inventories -- grew at a whopping 7.1% annual rate, an encouraging sign of strong underlying demand in the U.S. economy

...

Despite the recent rise in stocks, Americans' wealth still suffers from persistently low home prices. The unemployment rate, though improving, remains above 9.0%. The economy must grow by at least 3.0% to reduce the jobless rate, according to economists.

http://online.wsj.com/article/SB10001424052748703956604576109772560128768.html?mod=googlenews_wsj

[snappyturtle]

1. If the growth accompanied a rise in wages and standard of

living, I would be thrilled.

[DCBob]

2. Sounds like we are still heading in the right direction..

albeit painfully slow.

[Statistical]

3. Well sustainable GDP growth >3% is unlikely with an economy as mature as the US.

Still if 3% GDP growth translated into 3% employment growth we would be doing great. Part of the problem is GDP growth can be accomplished by expanded payroll (either more worker or workers working more hours) or productivity.

In essence:
GDP = number of workers * average hours worked * productivity of average worker


So say the US economy continues to grow at 3%. We currently have roughly 140 million persons working. If economy grows at 3% and productivity remains flat and number of hours worked remains flat then that would require roughly 3% more employment. Roughly 4.2 million jobs. An amazing number. Would cut U-3 by almost a third in a year. U-3 rate would be down to 5% in less than 2 years.

Now the bad news. Productivity is still growing (the amount of tanglible output each worker can produce is growing). Say economy grows by 3% but productivity grows by 2%, and employers increases hours worked by 0.5%. That only requires 0.5% increase in number of persons employed to meet demand. A measly 0.7 million jobs.

[Johonny]

4. persistently low home prices

lol- prices still so high I can't afford a house.