The US economy grew at its fastest rate in more than two years in the first quarter, up from earlier estimates and reflecting a better-than-expected showing for consumer spending and business investment, the US government said today.
US gross domestic product (GDP), the broadest measure of goods and services produced within the country's borders, grew at a revised 6.1 per cent seasonally adjusted annual rate during the first three months of this year, up from an earlier estimate of 5.6 per cent, the Commerce Department said in its final reading for the quarter.
"The stronger than expected GDP number confirms that the US did not really experience a recession in classic terms, but instead experienced an economic slowdown," said Mr Edgar Peters, chief investment officer at PanAgora Asset Management in Boston.
Still, the government's latest GDP estimate beat Wall Street expectations but the number is unlikely to reassure financial markets shell-shocked by a series of corporate accounting scandals and worried about signs the economic recovery has since become more uneven.
"The economy is experiencing a mild recovery from a mild slowdown. Disappointment came because everyone expected a more pronounced recovery after a severe recession," said Mr Peters.
Consumer spending, which fuels two-thirds of the economy, grew at a 3.3 per cent annual rate during the quarter, up slightly from the earlier 3.2 per cent estimate.
A smaller decline than first estimated in consumer purchases of durable goods, big-ticket items intended to last for several years, helped push up the spending figure. Business spending - which Federal Reserve officials regard as crucial to a sustainable economic expansion - declined during the first three months of the year but not as sharply as previous estimates.
According to the report, business investment fell at a 6.2 per cent annual rate, a smaller drop than the previously estimated 8.2 per cent decrease.
In one bright light, while businesses did not break ground on new plants, spending on equipment and software was up 0.1 percent, the first gain since the third quarter of 2000.
The biggest surge in defense spending since 1967 following the September 11th attacks also helped push up GDP growth during the quarter.