Plus: U.S. Economic Growth Revised Up for Q4 2010, Durable Goods Demand Slips and Jobless Claims Stabilize.

U.S. Economy Accelerated in Q4 2010
The United States economy grew slightly faster during the final months of 2010 than previously thought, fueled by consumer spending and healthy exports, according to new estimates.

Based on more complete data, the U.S. Department of Commerce says that U.S. real gross domestic product (GDP) increased at a 3.1 percent annualized rate in the fourth quarter, revised up from the 2.8 percent pace reported earlier.

The Commerce Department says consumer spending and exports helped drive the overall number higher in the fourth quarter, while budget cuts by state and local governments continued to hold back growth.

The revision to GDP was in line with the expectations of economists surveyed by MarketWatch.

“The upward revisions are encouraging, though things are shaping up to be a bit of a disappointment this quarter,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. said in a Bloomberg News report. “Consumer spending seems to be a little bit softer than we anticipated. We know we’ll hit speed bumps, but the recovery will gather momentum through the year and into 2012.”

Durable Goods Orders Drop in February
Orders for big-ticket products in the U.S. fell unexpectedly in February, with new orders for manufactured durable goods decreasing 0.9 percent to $200 billion, following a revised 3.6 percent increase in January, according to the U.S. Department of Commerce last week. Economists surveyed by MarketWatch had expected a 1.5 percent overall rise in durable goods orders for the month.

Excluding the often-volatile transportation sector, new orders fell 0.6 percent in February. Machinery orders, down for two consecutive months, had the largest decrease last month, falling 4.2 percent to $26.6 billion. However, machinery shipments were up, rising 2.6 percent to $26.1 billion. Overall durable goods shipments, up five of the last six months, climbed 0.3 percent to $203.2 billion.

“Even with the February decline, durable goods orders were 24.6 percent above the recession low hit in March 2009,” the Associated Press reports. “Manufacturing has been a source of strength in this recovery. Economists expect that to continue with factories getting a boost from rising consumer demand and a new tax cut aimed at spurring business investment.”

Non-defense capital goods orders, a gauge for business investment plans and an important factor in calculating GDP, increased 2.5 percent to $69.1 billion last month, while shipments rose 1.1 percent to $66.2 billion. However, excluding volatile aircraft orders, new capital goods orders actually declined 1.3 percent, indicating that more companies are growing cautious about buying new equipment.

“Buoyed by the fiscal stimulus package enacted in December 2010 and still strong demand from key emerging market economies, the U.S. factory sector will continue to be an important element of a sub-par U.S. economic recovery,” Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, said in an analysis of the durable goods report. “Nonetheless, pronounced weakness in housing and labor markets, growing fiscal uncertainty, and significantly increased global risks have likely been weighing, and will likely continue to weigh, on the confidence of business decision makers and therefore constitute headwinds for capital spending activity and U.S. manufacturing prospects.”

Jobless Claims Inch Downward
New initial jobless claims fell slightly in the latest week reported, signaling gradual but steady improvement in the job market. According to the U.S. Department of Labor, seasonally adjusted unemployment claims decreased by 5,000 for the week ending March 19, bringing the total to 382,000. The four-week moving average fell by 1,500 to a total of 386,750.

Although jobless claims had a modest decline for the week, the total number of people receiving unemployment benefits dropped to its lowest level in nearly three years. In the week ending March 12, the seasonally adjusted total for people continuing to claim jobless benefits dropped by 2,000 to 3.72 million, the lowest number since September 2008.

“Many workers who have used up state benefits are eligible for extended relief from the federal government, and that number edged down to 4.34 million from 4.36 million in the week to March 5,” MarketWatch reports. “The total number of workers who received some kind of state or federal benefit in the week to March 5 fell to 8.77 million from 8.95 million.”

Improving employment conditions are also having a wider positive effect on the U.S. economy, as joblessness slowly stabilizes and Americans become less reluctant to spend.

“Waning firings and a pickup in hiring are helping to ensure gains in consumer spending, which accounts for about 70 percent of the economy,” Bloomberg News reports. “The report is consistent with Federal Reserve policymakers’ assessment that the economic recovery is on a firmer footing, even as they said the unemployment rate remains ‘elevated.’”

Study on Deepwater Horizon’s Blowout Preventer Finds Design Flaw
Norwegian risk-management firm Det Norske Veritas, at the request of federal investigators, released a study on Wednesday that found the blowout preventer beneath the Deepwater Horizon rig in the Gulf of Mexico wasn’t designed to withstand a real-world crisis.

“The device, known as a blowout preventer, was a massive set of valves that sat on the sea floor nearly a mile beneath the Deepwater Horizon drilling rig, which floated on the surface,” the Wall Street Journal explains. “It was equipped with powerful shears designed to cut through pipe and seal off the well in an emergency.”

In the government-funded forensic examination, which doesn’t address what caused the blowout itself, engineers say they have determined why the device failed in last year’s disaster.

“The force of the blowout bent the drill pipe, knocking it off-center and jamming the shears. Rather than seal the well, the blades got stuck 1.4 inches or less apart, leaving plenty of space for 4.9 million barrels of oil to leak out,” the Journal explains. “The investigators concluded the blowout preventer failed as a result of a design flaw, not because of misuse by BP or any of the other companies involved, and not because of poor maintenance. The fail-safe device, the last line of defense against a disaster, wasn’t designed to handle a real-world blowout, according to investigators, who called for further study of the devices.”

Det Norske Veritas has submitted its report to the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement, which along with the U.S. Coast Guard will hold a seventh session of public hearings the week of April 4, 2011. The hearings will focus specifically on the forensic examination of the Deepwater Horizon blowout preventer.