Economic growth in the U.S. during the fourth quarter was higher than had been initially estimated due to a strong upwards revision of business investment, according to Bloomberg. On Friday, the Commerce Department reported that the increase in U.S. gross domestic product during the last three months of 2010 was 3.1%, rather than the 2.8% that had been initially estimated. The revision outpaced economists’ forecast for a slight upwards move, and brought full-year growth for 2010 2.9%, reversing the 2.6% drop the previous year.
The revision showed that consumer spending rose 4% during the fourth quarter of last year, which is off slightly from the previous estimate of 4.1% growth, but still represents the fastest growth since the end of 2006. Ryan Sweet of Moody’s Analytics said, “The upwards revision are encouraging,” but warned, “Things are shaping up to be a bit of a disappointment this quarter.” The upwards revision was led by a 7.7% annual rate of growth for business investment, which is up from 5.5% growth in the first estimate. Inventories were stocked at a revised $16.2 billion annual pace, which is more than double the initial estimate.