US fourth quarter GDP revised up
The U.S. economy grew a bit faster than initially thought in the fourth quarter on slightly firmer consumer and business spending, calming fears of a sharp slowdown in growth in early 2012.
Gross domestic product expanded at a three per cent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said on Wednesday in its second estimate.
That was a step up from the 2.8 per cent pace it reported in January. Economists polled by Reuters had expected fourth-quarter GDP would be unrevised at a 2.8 per cent pace. The economy grew at a 1.8 per cent pace in the third quarter.
“This shows a steady improvement despite all the volatility in stock prices we had last year and shows that we are nowhere near lapsing back to recession,” said Tim Ghriskey, chief investment officer at Solaris Group in New York.
US stock index futures added to gains on the data, while prices for Treasury debt trimmed gains. The dollar pared losses against the yen.
A sustained GDP growth pace of at least three per cent would likely be needed to make noticeable headway in absorbing the unemployed and those who have given up the search for work.
While a build-up in business inventories still accounted for much of rise in output in the last quarter, revisions to GDP unveiled an improved tone for the first-quarter growth outlook.
Consumer spending, which accounts for about 70 percent of U.S. economic activity, was raised to a 2.1 percent rate from 2 percent.
Business investment in capital goods was lifted to a 2.8 percent pace from 1.7 per cent, but still weak compared to the recent trend. Outlays on home building were firmer than previously estimated, while investment on nonresidential structures was modestly weak.