Consumer spending, real gross domestic product rise in last quarter of 2010

Linda Young – AHN News Writer

Washington, DC, United States (AHN) – United States consumers opened their wallets more and boosted the economy in the last three months of 2010.

Real gross domestic product (GDP) grew at an annual rate of 3.2 percent, up from 2.6 percent the previous quarter, according to a report from the Commerce Department released Friday.

Real GDP measures all the goods and services produced by labor and property located in the U.S.

“The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, and nonresidential fixed investment that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased,” the Commerce Department wrote in its quarterly estimate.

Consumer spending had a lot to do with the increase in GDP.

Spending by consumers grew by 4.4 percent during the last quarter of 2010. Because consumer spending accounts for about 70 percent of economic growth, high unemployment from the recession slowed economic growth in the U.S.

Although spending is up, observers caution that continued high unemployment is still damping economic growth.

Analysts say it will take several quarters of sustained growth to begin to lower the unemployment rate and that even then it will take years to reduce the current 9.8 percent unemployment rate to 5 percent.

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