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Last Updated: Wednesday, 29 June 2005, 13:44 GMT 14:44 UK
US growth returns to robust form
Oil refinery in California
The figures suggest high oil prices have yet to affect growth
Strong exports and home-building has kept the US economy growing faster than expected, official figures show.

Gross domestic product (GDP) rose at an annual rate of 3.8% in January-March 2005, above the initial 3.1% estimate and in line with the previous quarter.

The data from the Commerce Department suggests that high oil prices have yet to dent the US's capacity to expand.

They could also indicate that the Federal Reserve is likely to raise interest rates again.

The Fed began its monthly rate-setting meeting on Wednesday, and is widely expected to push the cost of borrowing up to 3.25% on Thursday - for the ninth month in a row - from the current level of 3%.

Continued expansion

So far, the US economy's ability to keep expanding seems to be resisting the gloom emanating from some economists, while inflation also remains subdued.

But the recent renewed surge in oil prices has yet to affect the headline growth figures.

Among other possible causes of trouble ahead are the US's huge deficits - trade, government budget and current account - a potential housing bubble and growing consumer debt.

The buoyancy of the housing market was underscored by an 11.5% growth in spending on new homes, three times the rate in the previous quarter.

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