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Sunday, 22 September, 2002, 16:22 GMT 17:22 UK
US growth 'set to pick up'
US economy graphic
The chief White House economic adviser Lawrence Lindsey has said growth in the US will begin to pick up later this year, according to the Sunday Times newspaper.

In an interview with the paper Mr Lindsey also said that the US should avoid a 'double-dip' recession.

Mr Lindsey said he thought the US economy would grow at a rate of between 3.8%-4% during the last three months of the year.

And he said he expected the economy to expand by between 2.8%-3% in 2003.

Rate decision this week

The final estimate of US GDP growth for the April to June period is due out on Friday.

Initial figures showed that the economy was growing at an annual rate of just 1.1% during that period, well below the rate of 5% in the first three months of the year.

On Tuesday the US Federal Reserve is due to make its latest decision on interest rates. which currently stand at 1.75%, the lowest level since July 1961.

After its last meeting it hinted that more rate cuts could be on the way, saying that economic weakness, rather than rising inflation, was now its greatest concern.

But analysts think that the Fed will keep rates on hold this week.

"At this point they're showing no sign of any thought of cutting rates at any time," said Allen Sinai, chief economist at Decision Economics.

"The data have to convince them that there is a serious chance of a real falling out of the economy."

Consumer spending 'to stay strong'

Economists and investors have been worried that the US economy could be heading for another recession, having only just recovered from 2001's recession - the so-called 'double-dip' scenario.

Consumer spending has continued to drive the US economy forward, but analysts are not sure how long this will continue.

However, Mr Lindsey told the Sunday Times that consumer spending would continue to rise because real disposable incomes are continuing to increase.

"It's a question of buying time until business investment recovers, and using that time wisely by putting more money in consumers' pockets, which is what the tax cuts have done," he told the paper.

Mr Lindsey said he did not think the US economy would see a double-dip recession even if there was a war with Iraq.

He said economies would grow more quickly in a world without Saddam Hussein.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
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