By Ian Swanson - 01/29/10 02:15 PM EST
The growth was higher than expected, and could give a boost to President Barack Obama and Democrats in Congress whose political fortunes are tied to an improving economy. The jump in growth is the largest reported since the third quarter of 2003.
Christine Romer, chairwoman of Obama's Council of Economic Advisers, said it was the "most positive news to date on the economy" in a statement Friday morning.
Romer also credited the $787 billion stimulus package approved last year for some of the growth.
"This broad-based rise in GDP was surely fueled in part by the tax cuts and investment spending in the Recovery Act and other rescue actions, but some appears to be the result of private sector demand returning," she said.
The Commerce Department’s Bureau of Economic Affairs said the growth reflected investments by businesses that spent money on inventories. It also reflected rising exports, while imports, a drag on gross domestic product, decelerated their increase.
This is the second consecutive quarter in which Commerce has reported growth, but the jump in the fourth quarter was more than twice as large as the reported increase in the previous quarter. The economy grew by 2.2 percent in the third quarter, Commerce said.
The fourth-quarter numbers are an advance estimate that could be adjusted. A second estimate with more complete data will be released at the end of February.
Obama’s administration has been rocked by a plummeting economy since it took office, with job losses in every month save November. Vice President Joe Biden has said he expects the economy to begin creating jobs in the spring, and the growth suggested by the figures released on Friday could lead to increased hiring by business while raising confidence that the economy is turning around.
Democrats are bracing for losses in the midterm elections in November. With unemployment at 10 percent, voters in several recent polls see the economy and jobs as the No. 1 issue for Washington.
Obama in his State of the Union address on Wednesday called
on Congress to deliver a jobs bill to his desk, and dedicated more than half of
his speech to economic issues. He will announce a new small business tax cut on Friday.
Senate Democrats are haggling over the cost and scope of a jobs bill, with some committee chairmen coalescing around a plan to develop a smaller bill than the $80 billion package once planned.
The House approved a larger package just before Christmas.
Lawmakers and administration officials next week will be
anticipating the release of the unemployment report for January, to be released
one week from Friday.
Romer said the report does not mean more actions by the government are not necessary.
"There will surely be bumps in the road ahead, and we will need to continue to take responsible actions to ensure that the recovery is as smooth and robust as possible," she said. "Nonetheless, today’s report is a welcome piece of encouraging news."
This story was updated at 10:28 am.