The US economy gained surprising momentum in the first quarter, boosted by stronger consumer spending as the United States completed a record tenth year of unbroken expansion, the US government today.
The US Commerce Department said gross domestic product, the broadest measure of national economic activity, increased at a stronger-than-expected two per cent annual rate, accelerating from one per cent in the closing quarter last year when the economy was edging ahead at its most sluggish pace in five years.
One potentially worrisome indication was a pickup in prices. A closely watched inflation gauge rose at a 3.3 per cent rate that was well ahead of the fourth quarter's 1.9 per cent.
The first-quarter GDP performance handily outstripped Wall Street economists' forecasts for a 1.1 per cent growth rate. It reinforced the impression that the US economy, while growing more slowly, will escape recession and suggested the Federal Reserve's aggressive interest rate-cutting campaign was keeping vital consumer spending buoyant.
"The largest contributor to the step-up in GDP was an upturn in consumer spending for goods," the Commerce Department said. Consumer spending, which fuels two-thirds of US economic activity, grew at a rate of 3.1 per cent after a 2.8 per cent pace of advance the final three months of 2000.
The report comes as finance ministers from the Group of Seven industrial nations gather for a weekend meeting to decide how to counter a global economic slowdown.
The ministers from the G7 - the United States, Britain, Canada, France, Germany, Italy and Japan - meet tomorrow to discuss how to keep growth going so all regions can benefit.
The stronger US GDP report was certain to be welcome since the United States accounts for such a dominant position in the global economy and is a vital market for the exports of other nations.