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Thursday, 27 June, 2002, 13:27 GMT 14:27 UK
Surprise jump in US growth
Americans cheering their football team
A cheering economic picture
The US economy grew at its fastest rate in two years in the first quarter, revised figures show.

Gross domestic product (GDP) grew at a revised 6.1% during the first three months of this year.

This compares with an earlier estimate of 5.6% for the quarter, while growth in the last quarter of last year grew just 1.7%.

The growth can be attributed to the continued enthusiasm of the American shopper, who spent more than had previously been estimated.

Other factors at play included an increased government spend on defense.

It had originally been estimated that business investment fell 8.2%. The new figures show that it fell by just 6.2%.

Business spending is regarded by many as crucial to a sustainable economic expansion.

Another factor was the smaller-than-expected trade deficit.

The sharp rise in gross domestic product (GDP) fuelled hopes that the US economic troubles were coming to an end.

"The stronger than expected GDP number confirms that the US did not really experience a recession in classic terms, but instead experienced an economic slowdown," said Edgar Peters, chief investment officer at PanAgora Asset Management in Boston said.

How strong?

However, concerns remain about the strength of the recovery - some economists believe that GDP will grow at a rate of 2.5% or less in the current quarter.

The WorldCom accounting fraud is the latest in a series of such scandals, which could shake consumer confidence.

"We would be lucky in the current quarter to see growth of half that pace," Geoffrey Somes, senior economist at Fleet Bank in Boston said.

The Federal Reserve left interest rates on hold on Wednesday.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

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