US growth in 1992 fastest for three years

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The Independent Online
WASHINGTON (Reuter) - The US economy grew at its fastest pace in three years during 1992, helped by strong consumer spending in last year's closing quarter.

The Commerce Department said yesterday that gross domestic product expanded at a 3.8 per cent annual rate in the final three months of the year. In the previous three months, the economy grew by 3.4 per cent.

The fourth-quarter pace was the strongest quarterly growth rate in four years, falling just short of the 3.9 per cent recorded in the final quarter of 1988.

For all of 1992 the economy grew at a 2.1 per cent rate - the biggest increase since 1989, when it grew 2.5 per cent. In the summer of 1990 the US economy slipped into recession after an unbroken eight years of growth.

The strong growth recorded in the closing months of the Bush administration in 1992's fourth quarter is widely forecast to slow this year, although the Clinton administration is preparing a modest dollars 20bn package of spending increases and tax cuts to try to boost economic activity.

Massive layoffs at big industrial companies - 50,000 at the retailer Sears Roebuck, 100,000 at IBM and 74,000 at General Motors - have shrunk consumers' incomes and delayed the recovery.

Consumer spending, which accounts for two thirds of US economic activity, rose at an annual rate of dollars 35.2bn in the final three months last year as retailers enjoyed their best Christmas season in years. That followed a strong rise of dollars 29.9bn in consumer spending in the third quarter.

The department said inventories increased by dollars 7.2bn in the third quarter after a dollars 15bn rise in the second quarter. Investment by businesses climbed strongly at a dollars 12.1bn annual rate in the fourth quarter after a dollars 4bn increase in the third quarter.