Taking Apart the Tainted GDP Data

For more commentary from Tony Crescenzi and his instant reactions to the latest economic news, check out his blog on RealMoney.com.

According to the latest gross domestic product data, the U.S. economy expanded faster than expected in the fourth quarter, at a 3.5% pace compared to the forecasts for 3.0%. This gain followed subpar growth in the previous two quarters.

These fourth-quarter data are strong enough to keep the Federal Reserve on the sidelines. Although growth did accelerate, those who are bearish on the economy will seize upon some important factors in the GDP report:

• A decrease in business spending
• Sharp weakness in residential investment
• High government spending
• Lackluster nominal personal spending.

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