US GDP revised up

City A.M. Reporter

THE US economy expanded more than previously estimated in the fourth quarter, according to official data out today.

The data, from the US Commerce Department, said GDP expanded at a 0.4 per cent annual rate in the last three months of 2012, as a big gain in business investment and higher exports of services led the government to lift its previous estimate.

However, consensus was for US GDP to be revised up to 0.5 per cent.

Much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter when many economists see an economic growth rate closer to three per cent.

The fourth quarter rate was, however, higher than the government's previous estimate of a 0.1 per cent gain. Also, compared with the overall economy, consumer spending growth looked a little more robust, expanding at a 1.8 per cent annual rate.

The data comes as the S&P 500 today traded just above its record closing high, which it hit in October 2007.