US Economic Growth Best in six years

The United States economy grew at its fastest pace in over six years at the end of 2009, but a sluggish job market is still souring economists on the sustainability of the recovery.

Gross domestic product expanded at an annual rate of 5.7 percent in the fourth quarter, well above analysts’ expectations. It had grown at an annualized rate of 2.2 percent in the previous quarter. Analysts had forecast annualized growth of 4.8 percent in the fourth quarter, and the better-than-expected result sent stocks higher when trading opened on Wall Street.

“It was an excellent report, but it’s not clear how sustainable this pace of growth is,” said John Ryding, chief economist at RDQ Economics. “We need numbers like this for the next two years, and I just don’t think we can achieve that.”

The biggest lift to economic activity came because businesses ran down their stockrooms at a much slower rate than they had earlier in the year. The change in inventories added 3.39 percentage points to the fourth-quarter change.

Slower inventory liquidation is not the most promising way to guarantee growth going forward, but economists are hoping that once companies become more confident about the recovery, they may ramp up production to refill stockroom shelves.

“What goes down wildly has to go up at a pretty good clip,” said Robert Barbera, chief economist at ITG.

Still, many economists worry more about trends in final sales to consumers and businesses.

Consumer spending grew at an annualized pace of 2 percent in the fourth quarter, after an increase of 2.8 percent in the third quarter. That is better than many had feared when the quarter began, considering that the cash-for-clunkers program was no longer around to help stimulate spending.

But consumer spending has still been disappointing to many economists, given the trends in previous recoveries. In the past, housing and consumption often helped drive growth in the wake of a recession.

Without the benefit of similarly bombastic inventory changes, many economists are expecting tepid growth in the quarters ahead. Ian Shepherdson, chief United States economist at High Frequency Economics, expects output to expand by a mere 1 or 2 percent, at an annualized rate, this quarter and next.

The biggest challenge going forward is the job market.

International trade over all increased last quarter, and exports grew nearly twice as fast as imports, helped along by a relatively weak dollar.

The G.D.P. number is a broad measure of the economy’s total output of goods and services. While it is, by definition, a backward-looking figure, analysts watch it to get a sense of where the country may be headed.

The number can be subject to major revisions, especially when the economy is at a turning point. The annual growth rate initially reported by the government for the third quarter of 2009 was 3.5 percent, but was later revised to less-impressive 2.2 percent.

The government’s final figure for last quarter’s G.D.P. will be released in March.

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