Economy Watch: 4Q GDP Growth Shows Strength

GDP showed growth coming out of 2010; wages and benefits showed a minor increase for workers lucky enough to have jobs; and Lloyds Banking Group is unloading bum property loans.

U.S. GDP came in at an annualized growth rate of 3.2 percent for the fourth quarter of 2010, according to the Bureau of Labor Analysis’ advance estimate on Friday. That’s a little more than the historic norm for the last 30 years (3.05 percent growth per year), but not as much as expected nor as much as desired after a recession.

Still, some of the contributing factors in GDP growth during 4Q10 were strong indeed. Personal consumption expenditures, for example, were up 4.4 percent, compared with an increase of 2.4 percent during 3Q10. Durable goods orders increased 21.6 percent during 4Q10 compared with an increase of 7.6 percent in the previous quarter, and exports of goods and services increased 8.5 percent compared with an increase of 6.8 percent during 3Q10.

Inventories were down, however, enough to knock 3.7 percentage points from the fourth-quarter change in real GDP, after adding 1.61 percentage points to the third-quarter change. Private businesses increased inventories only $7.2 billion in the fourth quarter, following increases of $121.4 billion in the third quarter and $68.8 billion in the second.

Wages and benefits edge upward

It is well known that U.S. workers–those who still have jobs–have become more productive since the onset of the Great Recession, but are employers paying them more? A little, seems to be the answer. According to the Bureau of Labor Statistics on Friday, the cost of wages and benefits to employers was up 0.4 percent during the fourth quarter of 2010.

For all of 2010, the cost of wages and benefits rose 2 percent, which was an improvement for workers compared with the rise in 2009, which was 1.4 percent. Then again, not quite all of the costs represented by those increases actually went into the pockets of employees. Employer costs for health benefits–that is, the price of health insurance–rose 5 percent for the 12-month period ending December 2010. In December 2009, the 12-month percent change was 4.3 percent.

Among occupational groups for the 12-month period ending December 2010, cost increases for the compensation of private industry workers ranged from 1.5 percent for service occupations to 2.4 percent for production, transportation and material-moving occupations, reports the BLS.

Lloyds to unload distressed CRE loans

Reuters reported on Friday that Lloyds Banking Group plans to sell a portfolio of bum property loans worth up to $159 million (£100 million). The news organization, citing an anonymous source, said the loans include those associated with offices, retail and industrial sites.

The move would be a small, but possibly important, move by the bank to clear out some of its distressed property loans, and something it hasn’t done since before the Panic of 2008. Lloyds has had considerable trouble in dealing with the billions of pounds worth of distressed property loans it acquired along with the trouble HBOS, and has been ordered by the E.U. to deal with the problem.

Wall Street had collywobbles on Friday, perhaps upset by the uncertainties in Egypt (will the Suez Canal be closed?), with the Dow Jones Industrial Average giving up 166.13 points, or 1.39 percent. The S&P 500 lost 1.79 percent, and the Nasdaq was down 2.48 percent.

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