Economy Surges, But Trouble Looms

Q4 economy up 3.7%, but slowdown dangers lie ahead
By Mark Russell,  Newser Staff
Posted Dec 22, 2011 6:30 AM CST
Updated Dec 22, 2011 7:58 AM CST
In this Dec. 7, 2011 photo, a worker sits atop some ironwork at the construction site of a new store at the Harvard Park Shopping Center in Warrensville Hts., Ohio.   (AP Photo/Amy Sancetta)

(Newser) – Surging economic data, such as new construction, small business confidence, and initial jobless benefit claims, show the American economy is growing at the fastest clip since the recession started—at 3.7% annualized in the fourth quarter, that's four times faster than it was growing at the start of 2011. So why are economists so pessimistic? Because many of the most positive economic signs are unsustainable, economists think growth will sputter in 2012, falling to an annual rate of between 1.5% and 2% in the first half, reports the New York Times.

“Unfortunately, I think we’re going to see a slowdown over the course of next year," says the head of global economic research at a major bank. Europe is a major worry, where a crisis would hurt the US economy and strengthen the dollar. Higher consumer spending, lower commodity prices, and inventory turnover are all unlikely to continue, too. And the potential rise in payroll taxes and cuts to long-term jobless aid could drop growth half a percentage point and cost 400,000 jobs. “The clock is ticking. Time is running out,” said President Obama yesterday. (Read more US economy stories.)

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