U.S. economy posts growth

The U.S. economy grew at a 3.5 per cent pace in the third quarter, the best showing in two years, fuelled by government-supported spending on cars and homes. It is the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.

Going forward, many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans.

“This welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered,” said Christina Romer, President Barack Obama’s chief economist. “It will take sustained, robust ... growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve.”

The much-awaited turnaround reported on Thursday by the Commerce Department ended the streak of four straight quarters of contracting economic activity, the first time that has happened on records dating to 1947.

It also marked the first increase since the spring of 2008, when the economy experienced a short-lived uptick in growth.

The third-quarter’s performance — the strongest since right before the country fell into recession in December 2007 — was slightly better than the 3.3 per cent growth rate economists expected.

Armed with cash from government support programmes, consumers led the rebound in the third quarter, snapping up cars and homes.

A top concern is whether the recovery can continue after Mr. Obama’s $787-billion package of increased government spending and tax cuts fades. Even if the economy climbs back into positive territory in the third quarter, it will be up to the National Bureau of Economic Research, a panel of academics, to announce the official end of recessions. — AP