2% growth fails to cut US unemployment

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The US economy expanded at a annual rate of 2 per cent over the summer as consumer spending picked up, but economists warned that this was still too sluggish to bring down high American unemployment rates.

The third-quarter growth figures published yesterday marked an improvement from the feeble 1.7 per cent seen between April and June. Consumer spending, which accounts for 70 per cent of national economic activity, grew by 2.6 per cent as a stock market rebound helped improve sentiment.

But to have any impact on the9.6 per cent unemployment rate, the economy would need to rack up growth of 5 per cent for a full year.

To spur growth, the Federal Reserve is expected to restart quantitative easing next week, buying government bonds in an attempt to make loans cheaper and fuel spending.