WhatTheyThink

Q4 GDP: Initial Feel-Good Holiday Gives Way to More Sober Assessment

Press release from the issuing company

The U.S. Bureau of Economic Analysis today reported 2.8 percent growth in real gross domestic product for the fourth quarter of 2011.

The softer-than-expected performance in the holiday quarter signals both that holiday buying season was not as ebullient as Black Friday weekend sales suggested and that the economy remains challenged by significant structural headwinds.   While there are some improved prospects for job growth and some signs that housing might finally turn into a net contributor to economic growth in 2012, consumer confidence remains relatively low and household income growth lower still. Meanwhile, states and local municipalities continue to struggle with austerity. Thus while recent economic data have been a bit firmer, this is still an economy that will struggle to grow more than 1.5 percent in the first of 2012. Sustained economic growth above 2.0 percent is probably unrealistic.

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