Hopes US may avoid recession as growth is revised upwards

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The Independent Online

The US economy grew faster in the first three months of the year than first thought, new data revealed. First-quarter GDP growth was revised up to 0.9 per cent, from an initial estimate of 0.6 per cent, suggesting that – far from having already dipped into recession – the world's biggest economy may yet avoid a contraction.

Soaring exports and stronger-than-expected domestic demand for US-made goods contributed to the brighter reading, which is the second of three GDP estimates made by the US Commerce Department as more and better data arrives.

Economists had been expecting the upward revision, and warned that 0.9 per cent growth still reflects a sluggish economy. Second-quarter GDP is forecast to be lower, as high fuel and food prices crimp consumer spending and business profits, but the consensus is still that the US economy has remained in positive territory.

A recession is commonly defined as two consecutive quarters of negative GDP growth.A further bright spot in yesterday's figure was an upward revision to personal income, which suggests that consumer spending may not be as vulnerable as feared. However, in a separate survey, new jobless claims rose 4,000 last week to 372,000, and the number of people claiming benefit in the US now stands at 3.1 million, the highest level since February 2004.