Personal Finance

U.S. economy grows as consumer spending surges

Though it failed to meet the expectations of some economists, the U.S. economy grew at a 3.2 percent annualized pace in the fourth quarter of 2010, fueled largely by a surge in consumer spending.

A cornerstone of the U.S. economy, consumer spending grew at its fastest pace in more than four years as increasing confidence in an economic recovery firmly took hold; however, the actual growth rate fell short of the 3.5 percent median forecast of 85 economists who Bloomberg News surveyed because of a slowdown in inventories. Excluding stockpiles, the economy climbed at 7.1 percent rate - the most since 1984.

Guy LeBas, the chief fixed-income strategist at Janney Montgomery Scott, accurately forecast the actual growth rate and told Bloomberg the "consumer really drove the economy in the fourth quarter." Furthermore, he affirmed: "The economy has moved beyond recovery to a stable state of growth."

The U.S. Federal Reserve could refrain from raising interest rates from their current near-record low levels after reports showed inflation rose at its slowest pace on record. After contracting at a 2.6 percent pace in 2009, the U.S. economy logged 2.9 percent growth for all of 2010 - the most in five years.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.