Page last updated at 15:15 GMT, Friday, 29 January 2010

US economy in fastest growth rate for six years

House being built in the US
US economic growth is shooting through the roof

The US economy grew by an annualised rate of 5.7% between October and December, official figures have shown.

The number, which is a first estimate, is a big rise from the previous quarter's growth rate of 2.2%.

It suggests the country's economy is growing at its fastest pace for six years and confirms the US economy has left its year-long recession behind.

But even with the rebound, gross domestic product (GDP) shrank by 2.4% across 2009 as a whole.

That was the worst annual performance since 1946.

'Encouraging news'

White House economist Christina Romer said the strong growth in the fourth quarter of 2009 was "the most positive news to date on the economy".

Wow, great number... when life support is removed we'll have a pulse
Jack Ablin, chief investment officer, Harris Private Bank

"It is important not to read too much into a single report, positive or negative," she added.

"There will surely be bumps in the road ahead. Nonetheless, today's report is a welcome piece of encouraging news."

US GDP is expressed as an annualised rate, or annual pace, which shows what the three months' economic activity would mean if it carried on for a year.

The Bureau of Economic Analysis, which releases the data, emphasised that the fourth-quarter advance estimate was based on incomplete information and was subject to further revision.

Growth in the third quarter was originally estimated at an annualised rate of 3.5%, but was revised down to 2.2% after more information was received.

Most of the growth came from increased manufacturing to rebuild inventories. Consumer spending - the biggest component of the US economy - was down on the previous quarter.

Great number?

That point was singled out by Manoj Ladwa, a senior trader at ETX Capital: "The 'engine of the economy' that is consumer spending contributed little to the overall improvement in the numbers, indicating the recovery may still falter."

Others saw the news as more positive. Jack Ablin, the chief investment officer at Harris Private Bank in Chicago said: "Wow, great number. It's very solid and gives us a running start into the second half of the year when we can't rely on government stimulus.

"That's part of the plan, to get us moving as fast as possible, so when life support is removed we'll have a pulse."



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