Page last updated at 09:26 GMT, Thursday, 29 October 2009

US economy set to report growth

Car advertising the 'Cash for Clunkers' scrappage scheme
The 'Cash for Clunkers' scheme gave the economy a boost

Official data due later is expected to indicate that the US economy has started to grow, but analysts warn the continuing recovery will be slow.

The data, to be released by the Commerce Department later, is tipped to show that the US economy expanded by 3% between July and September.

Commentators say the growth has been greatly helped by President Obama's $787bn (£480bn) stimulus package.

Some now fear growth will fall markedly when this impetus comes to an end.

The expected growth during the third quarter was also lifted by the government's popular $3bn cash for clunkers car scrappage scheme.

This gave people trading in old cars $3,500 towards the cost of a new vehicle.

However, this scheme ended at the end of August, and the big car firms reported a sharp drop in sales in September as a result.

'Distorted by stimulus'

"It's good to have the economy growing again," said Brian Bethune, economist at IHS Global Insight.

You can say that the recession is over, but it sure wont feel like that
Dean Baker, Centre for Economic Policy Research

"But we don't think that rate of growth is sustainable because it is distorted by all the government stimulus.

"The challenge here is to get organic growth - growth that isn't helped by fiscal steroids."

Other analysts point to the continuing high level of unemployment in the US, where the jobless rate currently stands at 9.8%.

Any reduction in unemployment typically lags behind an improving economy.

The US entered the current recession in late 2007.

While a country's recession is generally considered to be over after one quarter of economic growth, the US economy will not be officially out of recession until it has been declared by the National Bureau of Economic Research (NBER).

"You can say that the recession is over, but it sure won't feel like that," said Dean Baker, co-director of the Centre for Economic Policy Research.

"There is a lot of downward momentum that isn't going to go."



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