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Since 2008 – Progress Through Politics

US Economy Grows 5.7% in Q4 2009

After a long ugly spell that could have resulted in complete collapse of the global economy, The Washington Times and other sources are reporting that the US economy grew dramatically in the last quarter of 2009.

The U.S. economy roared ahead in the final months of 2009, growing at its fastest rate in six years, as corporate America stopped slashing its inventories and again started to invest for the future.

As the saying goes, “It is darkest before the dawn”, and it looks like that is the sun we see over the horizon.

It isn’t all sunshine and roses, but it is above the 4.6% forecast and composed of pieces which give reason to expect a general continuation of the trend.

o  Consumer spending – the largest single part of the US economy – was up 2%, a sign that consumer confidence is edging back up.

o  Inventory reductions slowed from $139B in cuts in Q3 to $33.5B in Q4.  While this is still a drag on overall GDP growth, it indicates that there isn’t much more room for companies to clear out their warehouses and still stay in business so they will have to get back to more ordering from manufacturers to fill orders to their customers.

o  Businesses have also put off capital investments about as long as they can and are now stepping up their acquisition of equipment and software, providing better revenue streams for producers of those durable goods.

o  Exports showed gains in aggregate as well as in relation to imports.  Export growth was 18.1%, adding 0.5% of the 5.7% in overall economic expansion.  The numbers for import growth were not available in the referenced article, but any reduction in trade imbalance will play well for the US economy.

o  House investment is up 5.7% in the quarter, the second quarter of growth following 3.5 years of contraction.  Commercial real estate remains down, a market that will likely follow the lagging jobs market and only grow as the foundation for growing businesses has spent some time being steadily on the rise.

o  Government spending overall was actually down, with 3.5% decreases in defense spending and 0.3% in state and local spending more than offsetting an 8.1% increase in federal non-defense spending.  This is arguably where the lack of the stimulus would have brought down the overall GDP numbers directly, as well as impacting the spinoff spending in other areas of the economy where those earning incomes through stimulus projects would have had to decrease their own capital and personal spending.

So, while the road ahead is not (fortunately) to be described as a “boom” period, the “bust” is largely behind us.  Growth in Q1 of 2010 is not expected to be as high as Q4 in 2009, but economic contraction (i.e. recession) should be behind us.


  1. Only grew 0.1 per cent in the UK, largely thanks to our over reliance on financial services. They say when America sneezes, the UK catches a cold. Let’s hope the reverse is true.

  2. creamer

     Okay they proably weren’t that big.

    I wonder how many GOP strategist are upset by growth numbers?

    Employment will lag but you had to see this number go up first so it is encouraging.

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