WASHINGTON — The US economy managed to show a 0.9 per cent annual growth pace in the first quarter of the year, the government said yesterday, easing fears about a deep slump.
Published: Fri 30 May 2008, 9:38 AM
Updated: Sun 5 Apr 2015, 1:45 PM
In its first revision of the period’s gross domestic product (GDP), the Commerce Department hiked its estimate compared with an initial reading that reflected growth of 0.6 per cent.
Most economists had predicted that the government would revise its tally to show economic momentum ticking along at 0.9 per cent.
The higher revision to growth is likely to bolster the position of some analysts who believe the world’s largest economy will avoid a recession amid a persistent housing slump, a related credit crunch and soaring world oil prices.
A recession is typically defined as two straight periods of negative economic activity. The Federal Reserve has been trying to avert an economic downturn by aggressive slashing short-term interest rates.
Growth during the first three months of the year marked the strongest quarter of economic momentum since the third quarter of 2007, the government survey showed.
The improved revision was mainly fuelled by consumer spending on services, the exports of goods and services and government spending, the government said.
Despite the revision, US economic growth still remains subpar for the world’s biggest economic powerhouse.
“The overall GDP growth rate is still indicative of a sluggish economy on the cusp of recession,” said Paul Ferley, an economist at RBC Capital Markets.
The housing market slump continued acting as a significant drag on the economy, as did reduced consumer spending on durable goods, which includes big-ticket manufactured products such as cars, televisions and large household appliances. The new reading left consumer spending, a critical driver of economic growth, pegged at 1.0 per cent growth rate which marked a considerable moderation from a fourth quarter rate of 2.3 per cent. —
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