Is This the Best Economic News in Six Years?


That’s tough to say. But while we are certainly not out of the woods yet, this sure is sweet: During the fourth quarter of 2009, the U.S. economy expanded at its fastest rate in six years. Six! The GDP–which, yes, we are pretty fired up about — just crushed it, growing by 5.7%, well above what experts were predicting. That’ll teach experts to stop predicting stuff!

The main source of the surge came from a measure of businesses’ inventories, which remained high–the idea working there is that companies, sensing increased sales of their products, quickly began investing in more production, a welcome positive sign of recovery. (Still, it might be a measure that’s easily gamed or short-lived).

There was also some less fantastic news attached to the recent reports. Consumer spending, tied as it is to the unemployment rate, increased by only 2%, after rising 2.8% over the previous quarter. That’s not great for a nation that relies so heavily on consumer dollars to goose economic good fortune.

On the plus side, though, was a large leap in business’ spending on equipment and computer goods, which economists often consider an indication that the hiring pace will soon pick up. These infrastructure expenditures were up 13.2% in the fourth quarter, compared with a 1.5% tick in the third. If that is truly a harbinger of new job creation, the recovery’s speed will get a meaningful jolt.

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