GDP Revised Higher on Growing Inventories

Washington, DC, Feb. 26, 2010--Fourth quarter Gross Domestic Product grew a little faster than previously reported, according to the Commerce Department.

GDP increased at a 5.9% seasonally adjusted annualized pace in the final three months of 2009, revised up from 5.7% estimated last month.

In the third quarter, GDP rose at a 2.2% annual pace.

Nearly two thirds of the growth in GDP in the fourth quarter was accounted for by changes in inventories, not by final sales.

Although GDP grew at the fastest pace in six years, final demand in the economy was weak, rising 1.9% annualized, revised down from 2.2% earlier.

Excluding exports, final sales to U.S. purchasers rose at a 1.6% annual rate.

Even with healthy growth in the second half of the year, it was the worst year for GDP since the 10.9% drop in 1946. The economy shrank 2.4% in 2009 compared with 2008, the government said.

In 2009, business investment fell the most since 1942, while imports fell the most since 1946.

Consumer spending increased at a 1.7% annual rate, down from 2.8% in the third quarter when the government's cash-for-clunkers program boosted auto sales.

Most economists believe growth will slow in 2010 to about a 3% pace as the temporary boost from inventories wanes.