Economists and others weigh in on the 5.7% jump in gross domestic product at a seasonally adjusted annual rate.

Today’s report that GDP grew at a 5.7% annual rate is good news, but it’s far too early to break out the champagne and declare ‘recovery accomplished.’ Even if this growth rate were to be sustained for 3 years we would still not create enough jobs to climb out of the hole caused by this recession. Worse, this growth will not be sustained. This quarter’s growth was driven largely by a restocking of business inventories that will not be repeated in coming quarters. –Josh Bivens, Economic Policy Institute

at a 5.7% annual rate is good news, but it’s far too early to break out the champagne and declare ‘recovery accomplished.’ Even if this growth rate were to be sustained for 3 years we would still not create enough jobs to climb out of the hole caused by this recession. Worse, this growth will not be sustained. This quarter’s growth was driven largely by a restocking of business inventories that will not be repeated in coming quarters. –Josh Bivens, Economic Policy Institute GDP growth broke to a level above expectations based primarily on stronger than anticipated inventory… While consumer spending, the housing markets, and export growth all played a role, the 3.4% contribution to headline growth from inventory expansions remains easily the biggest factor in today’s GDP release… Also note that much of the inventory improvement was limited to non-durable goods and the auto industry, the latter of which is building inventories with questionable short term sales prospects. This inventory-driven GDP number also calls into question the sustainability of this type of growth–there’s no reason to anticipate that inventories will continue to build aggressively with consumer spending remaining somewhat stagnant. –Guy LeBas, Janney Montgomery Scott

to a level above expectations based primarily on stronger than anticipated inventory… While consumer spending, the housing markets, and export growth all played a role, the 3.4% contribution to headline growth from inventory expansions remains easily the biggest factor in today’s GDP release… Also note that much of the inventory improvement was limited to non-durable goods and the auto industry, the latter of which is building inventories with questionable short term sales prospects. This inventory-driven GDP number also calls into question the sustainability of this type of growth–there’s no reason to anticipate that inventories will continue to build aggressively with consumer spending remaining somewhat stagnant. –Guy LeBas, Janney Montgomery Scott Real final sales , GDP minus the impact of inventory adjustments, rose by 2.2% as compared to a long run average of about 2.7%. While today’s reading was better than expectations, we must note that real final sales rose by 5.6% or so on average through 1983. Gross domestic purchases, which measure purchases of both goods and services by U.S. residents wherever they are produced, rose by 5.1% in the quarter. This is a very impressive reading, having averaged 3% dating back to 1975. In 1983 though, this measure averaged 9.35% per quarter. –Dan Greenhaus, Miller Tabak

, GDP minus the impact of inventory adjustments, rose by 2.2% as compared to a long run average of about 2.7%. While today’s reading was better than expectations, we must note that real final sales rose by 5.6% or so on average through 1983. Gross domestic purchases, which measure purchases of both goods and services by U.S. residents wherever they are produced, rose by 5.1% in the quarter. This is a very impressive reading, having averaged 3% dating back to 1975. In 1983 though, this measure averaged 9.35% per quarter. –Dan Greenhaus, Miller Tabak Growth was also healthy beyond the inventory component, however. Real final sales (GDP less the contribution from inventories) rose by 2.2%, up from 1.5% in Q3. We had expected an increase of just 1.1% in final sales, so the report was meaningfully better than expected. Accelerating growth in final sales is the best evidence yet that the economy has turned the corner and is unlikely to slip back into recession. –Zach Pandl, Nomura Global Economics

beyond the inventory component, however. Real final sales (GDP less the contribution from inventories) rose by 2.2%, up from 1.5% in Q3. We had expected an increase of just 1.1% in final sales, so the report was meaningfully better than expected. Accelerating growth in final sales is the best evidence yet that the economy has turned the corner and is unlikely to slip back into recession. –Zach Pandl, Nomura Global Economics Real final demand went from plunging at a 4%-to-5% pace in fourth quarter 2008 and first quarter 2009 to flattish in the second quarter to 2% growth in the second half of last year. As households’ income situations improve and businesses invest more, we look for the upward momentum to continue in 2010, with gains of around 2.5% in first quarter, 3% in second quarter, and close to 4% in the second half of this year. –Stephen Stanley, RBS

went from plunging at a 4%-to-5% pace in fourth quarter 2008 and first quarter 2009 to flattish in the second quarter to 2% growth in the second half of last year. As households’ income situations improve and businesses invest more, we look for the upward momentum to continue in 2010, with gains of around 2.5% in first quarter, 3% in second quarter, and close to 4% in the second half of this year. –Stephen Stanley, RBS Surprisingly, federal, state and local government spending fell (-0.2%) which means the economy’s growth last quarter was powered by consumers and private industry. More Federal fiscal stimulus is in the pipeline for the first half of 2010, but the fourth quarter GDP data shows that the necessary “hand-off” or transition from government stimulus to private sector spending is underway which is essential to sustain the economic expansion! –Stuart Hoffman, PNC

fell (-0.2%) which means the economy’s growth last quarter was powered by consumers and private industry. More Federal fiscal stimulus is in the pipeline for the first half of 2010, but the fourth quarter GDP data shows that the necessary “hand-off” or transition from government stimulus to private sector spending is underway which is essential to sustain the economic expansion! –Stuart Hoffman, PNC The composition of this report will probably cause those analysts carrying fancy growth rates for the first quarter to pare them pack, as the biggest quarterly swing from inventories has likely been seen. Otherwise, the elements of final demand in this report were probably insufficient to change anyone’s mind about their fundamental view of the economy. –Joshua Shapiro, MFR Inc.

will probably cause those analysts carrying fancy growth rates for the first quarter to pare them pack, as the biggest quarterly swing from inventories has likely been seen. Otherwise, the elements of final demand in this report were probably insufficient to change anyone’s mind about their fundamental view of the economy. –Joshua Shapiro, MFR Inc. Big positive story still being overlooked is the gain in equipment & software spending — up 13.3% plus –John Silvia, Wells Fargo

still being overlooked is the gain in equipment & software spending — up 13.3% plus –John Silvia, Wells Fargo The 13.3% rise in equipment investment was the best since the first quarter of 2006. Equipment investment contributed 0.8 percentage point to GDP growth in the fourth quarter (0.5 point more than we had anticipated). The other big upside surprise was in foreign trade. This reflected a much smaller advance in imports than we had expected. The combination of stronger investment and weaker imports suggests that more of the upside in investment was fueled by domestically produced goods than we had assumed. –David Greenlaw, Morgan Stanley

was the best since the first quarter of 2006. Equipment investment contributed 0.8 percentage point to GDP growth in the fourth quarter (0.5 point more than we had anticipated). The other big upside surprise was in foreign trade. This reflected a much smaller advance in imports than we had expected. The combination of stronger investment and weaker imports suggests that more of the upside in investment was fueled by domestically produced goods than we had assumed. –David Greenlaw, Morgan Stanley At a time when the Fed is moving to end its credit easing policies, the Chinese are tapping on the monetary brakes and the support from the stimulus has passed, the risks to growth later this year are decisively pointed towards the downside. Later today administration officials and some pundits will be tempted to talk up the data, but they do so at their own peril. Those making premature declarations of victory toady may find their credibility challenged when the recovery sputters later this year. –Joseph Brusuelas

is moving to end its credit easing policies, the Chinese are tapping on the monetary brakes and the support from the stimulus has passed, the risks to growth later this year are decisively pointed towards the downside. Later today administration officials and some pundits will be tempted to talk up the data, but they do so at their own peril. Those making premature declarations of victory toady may find their credibility challenged when the recovery sputters later this year. –Joseph Brusuelas The good news is that the recession has ended around mid-year and the economy has begun to expand during the second half of the year. Most of the sectors has contributed to economic growth during the quarter. Final sales have increased from the second quarter. The not-so-good news is that most of the growth came from temporary factors such as inventories and government stimulus which can’t be sustained. –Sung Won Sohn, Smith School of Business and Economics

is that the recession has ended around mid-year and the economy has begun to expand during the second half of the year. Most of the sectors has contributed to economic growth during the quarter. Final sales have increased from the second quarter. The not-so-good news is that most of the growth came from temporary factors such as inventories and government stimulus which can’t be sustained. –Sung Won Sohn, Smith School of Business and Economics All things considered , this was a very strong report and is the first GDP report in 2009 to really elicit any semblance of a ‘wow’ factor. Having said that though, it is quite obvious to us that the rebound during the quarter was not a function of some new-found economic dynamism, but rather it was the slowing pace of inventory liquidation that really dealt the winning hand. The fact that sixty percent of growth can be attributed to this correction suggests the pace of GDP growth going forward will fail to keep pace, though that is not to say growth will stall altogether. –Ian Pollick, TD Securities