Growth in the US economy quickens in fourth quarter
- 27 January 2012
- From the section Business
The pace of US economic growth increased in the final three months of 2011, according to official figures.
The economy grew at an annualised rate of 2.8%, the Commerce Department said.
This was up from the 1.8% annual rate recorded in the previous quarter, although it was slightly lower than the 3% rate predicted by analysts.
However, the growth largely came from businesses stockpiling goods they had produced, rather than selling them.
Although the stockpiling lifted the figures, analysts believe businesses will not continue doing this, resulting in a lower growth figure for the current quarter.
The pace of consumer spending picked up to 2% from 1.7% in the previous quarter.
Much of this was attributed to an increase in sales of new cars, which rose by 14.8% over the quarter.
The Japanese tsunami last March disrupted production and delivery of models for major manufacturers, leaving customers waiting for pre-ordered cars.
US Treasury Secretary Timothy Geithner said it was worth remembering that the economy was still recovering from the 2008 global recession.
"I think it's probably worth recognising that we still face tremendous challenges," he told a session at the World Economic Forum in Davos.
"As a country, we are still repairing the damage caused by the devastating financial crisis that still has huge lasting impact on the basic fortunes of most Americans."
He said the housing and construction sectors were still weak, unemployment remained a huge challenge and people still had too much debt.
He added it was reasonable to expect the US economy to grow between 2% and 3% in 2012.
The rate of growth depended on two fundamental factors, he said - what happens in Europe and the Gulf, which determines the oil price, and "whether Republicans in Congress decide they want to legislate things that are good for growth in the short term".
Analysts warned that the headline growth figure for the fourth quarter did not tell the whole story.
"The Commerce Department's gross domestic product (GDP) report confirms the acceleration of growth that had been hinted at by a flurry of upbeat economic indicators and business surveys in recent weeks, but also reveals that the economy is less healthy than the headline growth rate would suggest," said Chris Williamson, chief economist at Markit.
David Watt, senior currency strategist at RBC Capital, said: "It's not that encouraging, but again, it's not going to affect the Fed.
"They're downplaying the recent economic numbers anyway. This seems consistent with the Fed's view that the US economy is going to need all the help it can get."
On Tuesday, the IMF warned that the US, along with other advanced economies, was "susceptible to spillovers" if the eurozone debt crisis intensifies.
The latest US jobs data showed that the unemployment rate dropped to 8.5% in December - the lowest rate in nearly three years - from 8.7% the month before. The Fed believes the rate will drop to 8.2% this year.
Stuart Hoffman, chief economist at PNC Financial Services, said he expected US growth to be "2.4% in 2012, and job growth will average about 140,000 per month, adding up to 1.7 million new payroll jobs over the course of this year".