The economy in the fourth quarter grew at its fastest pace in a year and a half but the dental as they say. May be in the deet tails on Tracy -- with MarketWatch news break and to talk to economist mark rittner of Wells Fargo about the fourth quarter GDP -- reports after.
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Fourth quarter GDP grew by two point 8% that is the strongest growth since the spring of 2010. But what's next mark visionary is the managing director and senior economist at Wells Fargo he joins me now. You know it's the best dad GDP in a year and a half but the question is is it good enough and is it sustainable and can be improved on.
Well the headline looks pretty good at first Clarence but it was lower than expected the consensus was look -- gain of around 3%. And a lot of the growth came from inventories and when you. When you look at the final sales they rose less than 1% and and that's a little worrisome -- this huge surge in inventories in this. In a means of production was growing faster than consumption. And and that that can contain.
Consumption and then by consumers.
about consumers and businesses. Consumer spending grew to 2% annual rate we -- some strength in car sales. In and other durable goods that -- I think a lot of Mexicans iphones and ipads. But -- and services well really we just up to 10%. And then and in businesses capital spending on equipment. Grew 5% but spending on structures which you would think it was like office buildings shopping centers but in reality it's mostly. Oil and gas drilling. Fell to seven point 2% annual rate in it that probably reflects that the recent plunge and natural gas prices which is. Putting some effort to cut back on their -- activity.
Then looking forward what does that tell you about says the prospects for growth in this quarter and beyond.
But I think that's one of the reasons that the market sold off after this announcement. This would. Suggest that -- that will slow in the first half of the year are our first look at the first quarter growth in your real GDP growth somewhere around one and a half percent. Mainly because that -- swing in inventories we know that inventories are going to add another fifty million dollars to growth like they did in the fourth quarter. And even if they're they're neutral or get a little bit of payback. It -- to sort of in a tough spot. Consumer spending also into the fourth quarter on weak note so we're not like this he is much growth in consumer spending. And then of course you get the government. And that was another big surprise in this morning number government outlays fell for the four point 6% annual rate with most of the -- in defense spending. And we have every indication that that's going to continue 2012.
So if for the full year we're looking at a full year 2011 are looking at the one point 7% growth. Did you think that we well. That will continue into this year.
There were look at brought 2% growth and in 2012. So a little bit better than not. Historically we needed to see growth in excess of two and a half percent a sustained basis to reduce you know what -- great. So it it really cult of the question. How -- the unemployment rate managed to come down during the last six months if we could recruit it just enough people want point 7%. Yes and in 2011. At my hunches is that growth is being understated somewhat. I think that the lift from energy production has been a little greater democracy in the what we're seeing in the -- and in the GDP figures. And I think that the -- look from. The iPad and the iPhone published new technology is probably providing a little bit more problems that -- there were -- the numbers but anyway you cut it growth are still pretty week.
Mark visionary managing director and senior economist at Wells Fargo in Charlotte's and I'm Tracy -- thanks for listening to MarketWatch news break. Today Smart companies embraced talent management to drive business performance. Even smarter companies -- to -- because while conventional talent management provides information. Taleo provides talent intelligence the deeper understanding in insight you need to attract develop and retain the best people. That's why over half of all fortune 100 companies reliant taleo. They understand important talent decisions can't be based on guessing. They need to be based on knowing taleo talent intelligence knows find out more at taleo dot com slash talent.
