Public CompanyUS economy expands 3.5% in Q3
The world"s largest economy US climbed out of recession as it grew by 3.5 per cent in the third quarter ending September 30 -- the first quarterly expansion in a year -- thanks to higher consumer and government spending among others.
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The economy, which was battered by the worst financial turmoil since the 1930s Great Depression, expanded last in the second quarter of 2008, when GDP rose 1.5 per cent.
The advanced estimates from the US Bureau of Economic Analysis (BEA) released today showed that American GDP expanded 3.5 per cent in the third quarter.
Consumer spending, which accounts for two-thirds of the GDP, grew 3.4 per cent in the quarter under review compared to 0.9 per cent fall in the previous quarter.
America is the latest advanced economy to shrug off recession and joins the likes of Germany, France, Japan and Singapore.
However, the country would be officially out of recession only after the National Bureau of Economic Research (NBER) declares so. A country is said to be in recession if its economy contracts for two straight quarters.
The third quarter growth was primarily due to rising personal consumption expenditures (PCE), higher federal government spending and exports, BEA said in a statement.
The economy shrank 0.7 per cent in the second quarter after contracting at a staggering pace of 6.4 per cent in the first three months of 2009.
"The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private inventory investment, in exports, and in residential fixed investment and a smaller decrease in non-residential fixed investment...," BEA said.
One of the main factors for the upturn in economic activities in the third quarter is the government"s "Cash for Clunkers" programme for the auto industry, which resulted in increased car sales. The initiative which ended in August had offered rebate of about $4,500 for consumers to purchase new cars and sell their old models.
As per NBER, the American economy officially slipped into recession in December 2007.
However, the situation turned for the worse after the fall of then Wall Street major Lehman Brothers in September 2008. Since then, the Federal government has come up with unprecedented measures including massive stimulus packages, to boost the nation"s sagging economy.
US stock markets opened higher on better-than-expected growth figures as also on government data that showed fall in jobless claims.
Elsewhere, the European Union also announced that business and consumer confidence in the 16 nations that use the euro rose to the highest level since Lehman Brothers collapsed.
Japan also announced growth in industrial production for the seventh month in a row.