News Article | 1/29/2010

Inventories Push U.S. GDP Up 5.7 Percent


Exports expanded 18 percent in growing fourth quarter, Commerce Department says

The U.S. economy grew at its fastest pace in six years in the fourth quarter, expanding 5.7 percent as companies scaled back their attempts to cut inventories, the U.S. Commerce Department said Friday.


The department’s Bureau of Economic Analysis said an 18.1 percent gain in exports also helped push GDP upward, along with stronger business investment in equipment and software.


“The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an upturn in nonresidential fixed investment,” the BEA said in its initial estimate on the last three months of 2009.


The government said real private inventories actually contracted $33.5 billion in the fourth quarter from the third quarter, but that was far less than the $139.2 billion inventory retrenchment in the third quarter and the $160.2 billion decrease in the second quarter.


The inventory improvement contributed 3.4 percentage points to the quarter’s economic growth.


The report mirrored assessment from transportation and retail industry executives who have said companies have been pushing goods to distribution centers and stores to restock shelves after sharply curtailing inventories early in the year.