Surprise! The Economy Isn't Shrinking

Fewer imports, more exports, and more business investment meant more growth in the fourth quarter.

Record inflows show that investors want it all: dividend, yield, safety and growth. Can they get it?
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There were rumblings of concern when the GDP report last month showed that economic output shrank at an annual rate of -0.1 percent in the fourth quarter. Today came news that the economy in fact grew at an annual rate 0.1 percent in that quarter—the tiniest indication of growth, but at least inching into positive territory.

The first revision to the fourth-quarter GDP estimate reflects a boost of $9.2 billion in output from October to December. The upward revision came from new data showing an increase in exports and business investment, alongside a decrease in imports. However, smaller business inventories counterbalanced those other positive additions.

[READ: GDP Falls for First Time Since 2009]

While the direction of change may have reversed, the Commerce Department noted in a release that "the general picture of the economy for the fourth quarter remains largely the same" as it appeared when it assessed a declining GDP in January.

Growth of 0.1 percent is a marked decline from the third-quarter growth rate of 3.1 percent, but the economy is still expected to continue expanding. Many economists expect sluggish growth through the first half of 2013, followed by an acceleration in the second half. The nonpartisan Congressional Budget Office predicts that, under current law, GDP will grow by 1.4 percent from the fourth quarter of 2012 to the fourth quarter of 2013, and then 3.4 percent in 2014.

[MORE: GDP Growth Revised Upward to 3.1 Percent]

However, where GDP goes from here is in large part dependent upon Congress. Sequestration cuts due to take place tomorrow could reduce GDP by an estimated 0.6 percentage points, according to the CBO. However, if Congress does not take action to reduce deficits and debt, it could hobble economic growth over the longer term.

Though some may celebrate the news of (slightly) positive growth, the figure could still change. The Commerce Department will release its final estimate of fourth-quarter GDP growth at the end of March.