Author: Maggie

According to the most recent news release from the Bureau of Economic Analysis, Real GDP decreased 0.1% in the fourth quarter of 2012, but increased 2.2% for the full year after increasing 1.8% in 2011. The pickup in economic growth for the full year 2012 mainly reflected a slowdown in imports, notably in capital goods (except autos) and consumer goods, a rebound in residential housing, an upturn in inventory investment and a smaller decrease in state and local government spending. The news release ascribes the acceleration in real GDP in 2012 to “a deceleration in imports, upturns in residential fixed investment and in private inventory investment, and smaller decreases in state and local government spending and in federal government spending that were partly offset by decelerations in PCE, exports, and non-residential fixed investment.”

According to a recent NY Times article the United States ended the 2012 year with factory output up and low inflation. This year’s tax increases, aimed to reduce the deficit, may put a damper on consumer spending. However, the NY Times has interpreted the low rate of inflation, which lifted consumer purchasing power, as a signal “that the economy may weather this year’s higher taxes.” Millan Mulraine, an economist at TD Securities, believes that the increase in factory and manufacturing output we have observed at the end of 2012 could be “a reflection of a broader pickup in overall economic activity.”