US Economy Grows At Fastest Pace In Over A Year

27 January 2012 - Which Way to Pay

US Economy Grows At Fastest Pace In Over A Year

Official results from the last quarter of 2011, have shown that the U.S. economy grew at its fastest pace in well over a year despite government agencies cutting back and consumers curbed spending. The Commerce Department said today that gross domestic product expanded at a 2.8 % annual rate, a sharp increase from the 1.8 % seen in the third quarter of the same year.  This increase came as people in the U.S. spent more (14.8%) on cars and other veichles and companies built up their stockpiles. Despite positive results, the figure was lower than the forecasted 3% but it does validate the Federal Reserve’s decision to continue to keep interest rates low.  It also suggests that the U.S. has so far been able to withstand the situation in Europe. Marcus Bullus from MB Capital has said, “The fourth-quarter GDP figures may have undershot predictions. But any disappointment should be mitigated by one plain truth – they are the best evidence yet that the American economic giant is stirring from its slumber.”

An economist at Capital Economics, Paul Ashworth has said that in terms of 2012 growth is likely to slow to 2% as business restocking slows, “Overall the pickup in growth doesn’t look good when you realize that most of it was due to inventory accumulation.” This is not the view felt by all as Ian Shepherdson, an economist at High Frequency Economics, said that business investment in capital goods should improve, as well as government activity and consumer spending should all help drive American growth. As the unemployment rate fell to its lowest level in 3 years to 8.5 % last month predictions for this year are varied. Also no one should think that the U.S. will be able to stay completely immune from the European crisis. A recession could easily put strain on U.S manufactured goods. The Federal Reserve earlier in the week said that a full recovery could take at least three more years.