US fourth-quarter growth revised up to 3.1 per cent

 
City A.M. Reporter
The US economy grew more quickly than previously estimated in the fourth quarter as businesses maintained fairly solid spending and restocked shelves to meet rising demand,new data has shown.

GDP growth was revised up to an annualised rate of 3.1 per cent, the Commerce Department said in its final estimate, close to its initial estimate of 3.2 per cent published two months ago and up from its tally of 2.8 per cent made in February.

The economy expanded at a 2.6 per cent rate in the third quarter.

For the whole of 2010, the economy grew 2.9 per cent, while corporate profits grew 20.4 per cent, the most since 2004.

Data so far suggest the economy maintained this growth pace in the first quarter, but there are concerns that rising oil prices could crimp consumer spending and slow the economic recovery.

The pick-up in growth has been acknowledged by the Federal Reserve, which injected massive amounts of money into the economy to stimulate demand.

The US central bank is expected to conclude its $600bn (£370bn) government bond buying programme at the end of June.

The government raised fourth-quarter growth estimates to reflect stronger business spending and inventory accumulation than previously forecast.

Business investment rose at a 7.7 per cent rate instead of 5.3 per cent, lifted by spending on equipment and software, as well as on structures. Spending grew at a ten per cent pace in the third quarter.

Spending on software and equipment increased at a 7.7 per cent rate instead of 5.5 per cent. Investment in structures rose at a solid 7.6 per cent, the first increase since the second quarter of 2008.

Business inventories increased $16.2bn instead of the $7.1bn estimated last month.