US Economy
US GDP rose at annualised 2.8% rate in Q4 2011; GDP rose 1.7% in 2011 and public spending fell the most since 1971
By Finfacts Team
Jan 27, 2012 - 2:20 PM

US real gross domestic product (GDP) increased an annualised 2.8%  in the fourth quarter of 2011 after increasing 1.8%  in the third quarter, according to estimates released today by the Bureau of Economic Analysis. Real GDP increased 1.7%  in 2011 after increasing 3.0%  in 2010. The annual decline in public spending was the biggest since 1971.

Fourth-quarter highlights: The following contributed to the pickup in real GDP growth:

• Inventory investment turned up and was the largest contributor to real GDP growth;
• Consumer spending for durable goods accelerated, mainly reflecting a sharp acceleration in motor vehicles and parts. Consumer spending for nondurable goods turned up.

These contributions to growth were partly offset by slowdowns in business investment and in consumer spending for services, a downturn in federal government spending, and a pickup in imports.

Prices: Prices of goods and services purchased by U.S. residents slowed, increasing 0.8%  in the fourth quarter after increasing 2.0%  in the third quarter. Energy prices turned down, and food prices slowed. Excluding food and energy, prices also slowed, increasing 1.0%  in the fourth quarter after increasing 1.8%  in the third quarter.

2011 highlights: Real GDP increased 1.7%  in 2011 after increasing 3.0%  in 2010.

The slowdown in growth in 2011 mainly reflected the following:

• A downturn in inventory investment;
• A downturn in government spending; the annual decline was the largest decline since 1971.

These contributions were partly offset by an upturn in net exports and a pickup in business investment.

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Fourth Quarter GDP Up 2.8%: