US economy grew faster than first thought in Q4
The US economy picked up more speed than initially believed in the fourth quarter, government data showed Wednesday, in a report that could encourage more confidence in the fragile recovery.
In an unexpected upward revision, the Commerce Department said the world's largest economy grew at an annual clip of 3.0 percent in the final three months last year.
Most analysts predicted the department would leave its initial 2.8 percent rate estimate unchanged.
The Commerce Department said the improvement was due in part to positive contributions from consumer spending, private inventory investment and a downturn in government spending.
The US economy grew in the fourth quarter to the best pace of the year, after setting a 1.8 percent rate in the third quarter.
The fourth-quarter revision left the gross domestic product growth rate unchanged at 1.7 percent for 2011.
With the economy suffering high unemployment and a depressed housing market, it was businesses building inventories, not American consumer spending, that led output in the October-December period.
Household spending was revised up slightly to a 2.1 percent pace, from 2.0 percent, and household numbers were much healthier, providing an encouraging outlook for consumer spending, which traditionally drives two-thirds of US economic activity.
Nigel Gault, chief US economist at IHS Global Insight, noted the new data shows the fourth-quarter saving rate was 4.5 percent, instead of the 3.7 percent initially estimated.
"Household incomes have been doing better than we thought, giving consumers a bigger cushion to cope with the headwind from rising gasoline prices," Gault said.