Jan 31, 2011

Gene Epstein winds up to place foot firmly in mouth on 4Q 2010 GDP call?

The fourth-quarter 2010 GDP report, released Friday, should convince all but the most diehard double-dippers that that the expansion of 2011 is firmly aloft.

Growth in the fourth quarter at an annual rate of 3.2% not only meant that real (inflation-adjusted) gross domestic product finally exceeded its prerecession peak of Q4 '07, thus signaling the recovery's end.

As mentioned, however, business is slow to hire during a recovery from a recession, which itself boosts output per worker. As confidence builds with the onset of expansion, workers are hired at a faster rate, while productivity growth tends to slow. Look for that to start happening in 2011.

~Gene Epstein, "Economic Beat" writer, Barron's magazine,  "GDP: Favorable Auguries", Barron's, January 29, 2011

No comments: