Last month, the Obama administration claimed success with the 2010 Q4 annualized GDP growth rate estimate from Commerce of 3.2%.  Today, Commerce has issued its customary follow-up estimate, and the news is not as bright.  Their 2010 Q4 estimate dropped to 2.8%, barely above Q3’s 2.6% — with one more estimate still left:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent.

The GDP estimates released today are based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 3.2 percent (see “Revisions” on page 3). …

The small fourth-quarter acceleration in real GDP primarily reflected a sharp downturn in imports, an acceleration in PCE, an upturn in residential fixed investment, and an acceleration in exports that were mostly offset by downturns in private inventory investment and in federal government spending, a deceleration in nonresidential fixed investment, and a downturn in state and local government spending.

Over the last two years, the pattern from Commerce has been to advance a flashy number initially, then back down in later estimates.  The worst case came early, when 2009 Q3 got revised to 2.8% from 3.5%.  In 2010 Q3, the pattern reversed itself, with GDP estimate rising in each new estimate to the 2.6% level.

Reuters doesn’t exactly use the U-word, but notes that its economists expected an upward revision in GDP:

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 3.3 percent pace. The economy expanded at a 2.6 percent rate in the third quarter. For the whole of 2010, the economy grew 2.8 percent instead of 2.9 percent.

The outlook is rather poor, thanks to surging oil prices from the crises in the Middle East and North Africa:

In addition, consumer spending — which accounts for more than two-thirds of U.S. economic activity — grew at a 4.1 percent rate in the final three months of 2010 instead of 4.4 percent.

It was still the fastest since the first three months of 2006 and was an acceleration from the third quarter’s 2.4 percent rate. But there are concerns that surging crude oil prices could hurt consumer spending and slow the economy’s recovery.

In other words, we have not freed ourselves from stagnation.  The one area that held the most promise, consumer spending, will likely get curtailed thanks to the inflation-multiplying effect of higher oil prices.  If we were pumping our own oil in the Gulf and off the coasts, we would not only have hundreds of thousands of more jobs, we would also have insulated ourselves a little better from the price effects of turmoil in the Middle East.  Our GDP might be going up instead of sideways at this point.