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Economy growing quicker than expected

By Tim Kidwell
Published: January 28, 2011

A U.S. Commerce Department report released Friday, Jan. 28, stated that real gross domestic product—the output of goods and services produced by labor and property located in the U.S.—increased at a rate of 3.2 % in the fourth quarter of 2010, up from 2.6% in the third quarter.

This is good news for retailers, since the increase is reflective of consumers spending more out of pocket. Consumer spending grew at an annual rate of 4.4% between October and December of last year, nearly twice the growth of the July-September period and the quickest it has increased in almost five years.

Even with unemployment still hovering around 16.7%, which includes the long-term unemployed, real disposable personal income increased 1.7% in the fourth quarter, as opposed to .9% in the third.

Despite the good news, the improving economy and unemployment is in for a hard slog, as Treasury Secretary Timothy Geithner pointed out in an interview at the World Economic Forum in Davos, Switzerland. “During the Financial crisis companies cut deeply into the employment base,” he said, which has led to a “more moderate reduction in unemployment as the economy recovers.”