The nation’s economic output grew at an annualized rate of 3.2% according to a report released this morning by the U.S. Department of Commerce. This number reflects, on an annualized basis, growth in the gross domestic product between the third and fourth quarters of 2010.
The positive increase in gross domestic product, the measuring stick for the market value of all final goods and services produced in the U.S., was primarily due to increases in personal consumption, exports, and residential fixed investment between the third and fourth quarters of 2010.
On the downside, the Commerce Department reported a decrease in private business investment, federal spending, and nonresidential fixed investment for the same period.
What may be more telling politically of the Obama administration’s efforts at managing the national economy are the changes in year-to-year growth. For example, the consensus among most economists has been that a normal growth path in the economy will see positive annual rates of three percent. For 2010, annual growth in real gross domestic product or GDP was 2.8% versus an increase of .2% in 2009. Driving the growth in 2010 were private inventory investments, exports, personal consumption, non-residential fixed investments, and federal government spending.
There also appears to be an increase in personal and commercial buying confidence between 2009 and 2010. For example, the price index for gross domestic purchases increased .5% in 2009. In 2010, this measure increased 1.2%.
What does this mean for the unemployed? One, it may provide a psychological lift to people looking for work, providing prospects that they may find a job. Second, as the economy improves and businesses see productivity per worker fall off in the face of increasing demand, employers will have an incentive to hire additional workers.
For Mr. Obama, the positive news on the economy may provide a tail wind into 2011, especially since the consensus among economists is for growth exceeding three percent. Given Mr. Obama’s proposed freeze on non-discretionary domestic spending, and the Republican Party’s call for slashing federal spending, the private sector and consumers will play an increased role in providing the level of spending necessary to keep the economy moving forward.