Wednesday, February 29, 2012

US fourth-quarter GDP revised up

The US economy grew a bit faster than initially thought in the fourth quarter on slightly firmer consumer and business spending, which could help to allay fears of a sharp slowdown in growth in early 2012.

Gross domestic product expanded at a 3 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its second estimate. That was a step up from the 2.8 percent pace it reported in January.

Economists polled by Reuters had expected fourth-quarter GDP would be unrevised at a 2.8 percent pace. The economy grew at a 1.8 percent pace in the third quarter.

While the build-up in business inventories still accounted for much of rise in output in the last quarter, the revisions to GDP unveiled an improved tone for the first-quarter growth outlook.

Businesses were not as aggressive in their restocking efforts, which should help to allay fears of a sharper slowdown in output this quarter.

In addition, consumer spending - which accounts for about 70 percent of US economic activity - was a touch firmer than initially thought. Consumer spending rose at a 2.1 percent rate instead of 2 percent.

Even spending on home building was firmer than previously estimated and investment on nonresidential structures was modestly weak.

So far data ranging from employment to manufacturing have shown underlying strength in the economy, reducing the need for the Federal Reserve to ease monetary policy further by launching a third round of asset purchases or quantitative easing.