|
Consumer spending rose 2.1 percent in the fourth quarter, powered by a jump in spending on autos and other long-lasting goods. That's an improvement from the third quarter. And it's much better than spending during the spring, when high gas prices nearly brought consumer spending to a standstill. Growth would have been stronger last quarter if not for a steep drop in government spending. Cuts in federal defense spending, along with reduced spending at the state and local levels, shaved nearly a full point off growth. A host of recent data has made many analysts more optimistic about this year's prospects. Companies have stepped up hiring, pushing the unemployment rate down for five straight months to 8.3 percent. U.S. factories boosted output last month, and December was their strongest month of growth in five years. Consumer confidence rose to its highest point in a year this month, the Conference Board reported Tuesday. That could signal that Americans are ready to step up spending. Consumer spending accounts for about 70 percent of economic activity. Some trends likely to slow growth in the current quarter are still good for consumers. The warm winter weather will likely mean Americans won't have to spend as much to heat their homes. Still, growth could be held back this year by rising gas prices, which have jumped 30 cents in the past month. That forces consumers to spend more for the same amount of gas and leaves less money for other purchases. A sharp rise in gas prices early last year helped slow the economy to a near-standstill. But so far, higher gas prices aren't enough to cause a repeat of last year's setback, economists say. With hiring accelerating and incomes higher, consumers are better able to pay the higher prices. In addition, last year, the prices of other goods, particularly food and energy sources such as natural gas, also jumped. But natural gas costs have plummeted recently. And food prices are rising much more slowly. Those trends should offset some of the squeeze on spending from pricier gas. The government makes three estimates of the gross domestic product for each quarter. GDP includes everything from autos to utility output to haircuts. Each revision is based on more complete economic data.
[Associated
Press;
Copyright 2012 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries
Community |
Perspectives
|
Law & Courts |
Leisure Time
|
Spiritual Life |
Health & Fitness |
Teen Scene
Calendar
|
Letters to the Editor