Real Gross Domestic Product rose by just 1.7 percent in 2011, the Commerce Department reported on Friday. That's not great news for President Obama, who oversaw 3 percent GDP growth in 2010 and cannot use the latest GDP data to support a narrative of economic turnaround.
The Commerce Department reported GDP growth at an annual rate of 2.8 percent in its first reading for the fourth quarter of 2011. The consensus estimate was for GDP to climb 3.0 percent in the last three months of 2011. But lower federal, state and local government spending mitigated that growth.
The Commerce Department will revise its estimate for Q4 GDP—and thus for the year—twice in coming months, with the third and final estimate released in late March. Significant changes can be made during the revision period; for example, first-quarter GDP fell from an initial report of 1.8 percent to a final reading of 0.4 percent last year.
The economy seemed to be gaining strength as 2011 drew to a close. But the fragile recovery could be knocked off its course by any number of things in 2012: a deep recession in Europe, prolonged fighting or failure to pass an extension of the payroll-tax cut or unemployment insurance in Congress, or a spike in oil prices.