The Commerce Department says the economy grew at a 5.6 percent pace in the October-to-December quarter in its third and final estimate of economic activity during the period. The growth was slightly less than prior estimates but still marked the strongest showing in six years.
The economy grew at a 5.6 percent pace in the fourth-quarter of last year, the Commerce Department reported Friday. Although the growth was slightly lower than expected, it was the economy's best showing in six years.
Most economists had expected no revision in the government's third and final estimate. Last month, the department put the gross domestic product's growth rate at 5.9 percent for the October-to-December period. That's up from third-quarter GDP of 2.2 percent.
The latest announcement puts the GDP figure closer to the 5.7 percent showing the department made in its initial advance estimate at the beginning of February.
The department's Bureau of Economic Analysis chalked up the revision to slower consumer spending and weakness in the commercial real-estate market.
Economists had reason to question whether the economy could sustain such a steep upward trend. Much of the growth comes from businesses restocking empty shelves after months of tepid consumer demand, which is expected to improve slightly — but not significantly — in the current quarter.
High unemployment, tight credit and home foreclosures that remain at record highs are certain to keep consumer spending on the sluggish side. And much of the fourth-quarter growth was the result of economic stimulus programs, many of which will soon begin winding down.
Most economists are forecasting an anemic growth rate of only 3 percent in the first quarter of 2010, with similar lackluster gains in the next two quarters. Even so, the forecasts are a big change from an economy that was shrinking just a year ago.
Although the numbers released Friday were slightly worse than expected, Wall Street basically shrugged off the news in early trading.
Businesses in the fourth quarter boosted spending on equipment and software at a pace of 19 percent, the most in 11 years. Meanwhile, the weak U.S. dollar helped boost exports to their highest level in 14 years, as foreigners snapped up relatively inexpensive U.S.-made goods and services at a pace of 22.8 percent.
But consumers increased their spending at a pace of just 1.6 percent. That was weaker than the government's prior estimate and was down from a 2.8 percent growth rate in the third quarter.
Friday's report also showed a slowing in corporations' after-tax profits. Under one measure, after-tax profits rose at a rate of 6.5 percent in the fourth quarter, down from a 12.7 percent growth rate in the third quarter. Although some companies are flush with cash, they aren't inclined to ramp up hiring until the recovery is on firm footing. Copyright 2010 National Public Radio. To see more, visit http://www.npr.org/.