The US economy grew at a 3.1 per cent annual rate in the fourth quarter, led by a jump in consumer spending that will be hard to match early in the year as energy prices surge.
The revised increase in gross domestic product compares with a 2.8 per cent estimate issued last month, figures from the Commerce Department showed today in Washington. Earnings at financial firms led a 2.3 per cent increase in corporate profits from October to December that capped the biggest annual gain in six decades.
Surging oil prices sparked by turmoil in West Asia may erode consumers’ purchasing power, and supply constraints caused by the tragedy in Japan may slow the pace of recovery this quarter. At the same time, lean inventories and growing demand from emerging economies will probably keep benefitting companies like Caterpillar, sustaining the expansion.
“The upward revisions are encouraging, though things are shaping up to be a bit of a disappointment this quarter,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, who correctly forecast the gain in GDP. “Consumer spending seems to be a little bit softer than we anticipated. We know we’ll hit speed bumps, but the recovery will gather momentum through the year and into 2012.”