<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Mark Whitehouse</p> <p>If Federal Reserve Chairman Ben Bernanke required further support for the argument that more monetary stimulus may be needed, he received it in today's government report on economic growth in 2011.</p> <p>The report's headline number -- annualized, inflation-adjusted growth of 2.8 percent in the fourth quarter of 2011 -- was a bit disappointing in itself. The details were even less encouraging: They strongly suggest that the positive signs of recent months -- stronger auto sales, more hiring and manufacturing activity -- won’t translate into a sustained burst of growth in 2012.</p> <p>Much of the stuff manufacturers produced in the last three months of 2011 appears to be sitting on shelves rather than getting sold. Private inventories increased by $72.6 billion in the fourth quarter, compared to only $800 million in the previous three months. Final sales -- a measure of economic growth that excludes inventory shifts -- rose at an annualized, inflation-adjusted rate of 0.8 percent, down from 3.2 percent in the previous quarter.</p> <p>Meanwhile, the removal of government stimulus is becoming a major drag. Total federal, state and local spending shrank by an inflation-adjusted 2.9 percent in 2011, the largest year-over-year drop since 1970. The pullback shaved 0.45 percentage point off economic growth for the year. Economists at Deutsche Bank expect further wind-down of stimulus programs to subtract as much as 2 percentage points from economic growth this year.</p> <p>With politicians focused on November's presidential elections, it's highly unlikely the government will change course on stimulus. As a result, Bernanke could have his work cut out for him.</p> <p>(Mark Whitehouse is a member of the Bloomberg View editorial board.)</p> <p> </p> </body> </html>