Obama Enjoys Second Full Year of Positive Economic Growth

Obama Enjoys Second Full Year of Positive Economic Growth

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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.

2 COMMENTS

  1. Yet another jobless recovery. The long-range forecasts for unemployment are depressing. But we can and should take the initiative and use every resource to try and claw our way back to full employment. One of the most critical and useful tools will be broadband, which has proven to be an engine for job growth. Continued investment in broadband networks will create jobs in a number of sectors. Moreover, the rapid integration of broadband into sectors like healthcare, energy, and education could spur even more job creation. And ensuring that all users are digitally literate will make our entire workforce competitive in the global digital marketplace. In sum, there is a lot we can and should be doing to turn back the tide of unemployment.

  2. You are right on John Q. Broadband is going to help speed up job growth, as well as move IT healthcare forward, help our children in school and bring them on a level playing field with other nations as far as digital literacey goes. I am looking forward to Obama's plans coming to fruition and looking forward to seeing people getting back to work!

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