US economy grows ‘better than expected’
December 23, 2013, 6:07 am

Stocks rose on news of better-than-expected economic indicators December 20 [Getty Images]

This is the strongest growth since the same period in 2011.

The revised annualised growth rate caps a month of strong indicators that will likely give the Obama administration something to smile about.

In the past three weeks, stronger retail sales and consumer purchases, added to the highest home construction rate in five years, have boosted performance on Wall Street.

The unemployment rate – at its lowest since 2008 – in addition to data pointing to the highest consumer confidence level since the October Federal Shutdown, indicates that the economy may be wobbling it’s way firmly out of recession and into more stable recovery.

In late November, a US Department of Labour report indicated that 10,000 fewer Americans had filed for unemployment benefits, bringing the seasonally adjusted rate down to 316,000 – a level not seen since before 2008.

The strong showing in the third quarter has prompted the International Monetary Fund (IMF) to revise its growth forecast for the US economy in 2014.

While she did not give any figures, IMF Chief Christine Lagarde said that US GDP growth will be higher than the October forecast of 2.6 per cent.

In an interview on the CBS network’s Meet the Press Sunday programme, Lagarde also said she applauded the manner in which the Federal Reserve began to taper it’s quantitative easing stimulus scheme.

Citing better than expected economic indicators and the fall of the unemployment rate to 7 per cent, the US Federal Reserve on Wednesday decided to scale back its quantitative easing program by $10 billion.

“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labour market conditions, the Committee decided to modestly reduce the pace of its asset purchases,” the Fed’s policy-making Open Market Committee (FOMC) said in a statement.

Its monthly bond-buying programme will now be reduced from $85 billion to $75 billion.

FOMC also announced it could keep interest rates near zero despite falling unemployment figures.

The IMF is expected to release global growth rates in January.

Source: Agencies