WASHINGTON — The lower-than-expected annualized growth rate of 2.8 percent reported Friday for the final three months of 2011 raises doubts about the strength of the U.S. recovery and concerns that 2012 may be another year of muddling along.
Most mainstream economists had expected the fourth-quarter number to come in at 3 percent or higher, and the lower final number from the Commerce Department meant that the U.S. economy grew at an annual rate of 1.7 percent for all of last year.
That’s below 2010’s growth rate of 3 percent for the nation’s gross domestic product, the sum of goods and served produced in the U.S. economy. It points to a tepid recovery after the deepest downturn since the Great Depression.
“I had hoped for a better GDP number, but I’m not worried,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “Cutting through all the crosscurrents in the data … the economy is growing near 2.5 percent. This is just enough growth to create enough jobs to maintain at least a stable unemployment rate.
“The economy re-accelerated at the end of last year and has started 2012 with a bit of momentum, given the improvement in the job market,” he said.
The White House put a positive spin on the number, noting that it marked the 10th consecutive quarter of GDP growth, lifting the nation’s economy above where it stood in the final three months of 2007, the start of what’s now called the Great Recession.
“While the continued expansion is encouraging, faster growth is needed to replace the jobs lost in the recent downturn and to reduce long-term unemployment,” Alan Krueger, the head of the White House Council of Economic Advisers, said in his blog after the GDP numbers were released.
One reason for the White House’s optimism is that perceptions about the economy seem to be turning more positive. Shortly after the GDP numbers disappointed, the University of Michigan-Reuters index of consumer sentiment was reported, and it came in slightly higher than consensus expectations. It was the latest in a string of positive indicators, including stronger employment numbers and solid manufacturing data.
More encouraging was the survey’s index of current conditions. It gauges how Americans feel about their own financial conditions and whether they think it’s a good time to buy pricey items such as cars and big appliances. That index rose sharply from the previous month and stands near a one-year high.
Taken as a whole, however, quarterly growth rates continue to be far smaller than they’ve been when coming out of past recessions and there are few signs of the economy roaring back into high gear.
“The fourth-quarter GDP data doesn’t show the recovery ‘taking off.’ It’s consistent with continued but gradual improvement,” Nigel Gault, the chief U.S. economist for forecaster IHS Global Insight, said in a note to investors.