The U.S. economy expanded by 1.6% in the last three months of 2005, according to the latest government estimate Feb. 28, but analysts expect growth to rebound quickly. The Commerce Department raised its estimate for fourth-quarter gross domestic product growth from its first figure of 1.1% given last month. But it was still down from the 4.1% pace seen over July-September.
GDP in the fourth quarter showed the weakest growth pace in three years after 10 consecutive quarters of expansion above 3%. But Treasury Secretary John Snow said the downturn was a blip. "The American economy continues to be on a very solid path of economic growth and job creation, with low unemployment claims, strong retail sales, orders for core capital goods continuing to grow at a robust rate and today's upward revision of fourth-quarter 2005 GDP growth," he said in a statement.
On a year-on-year basis, the economy grew 3.2% in the fourth quarter, the slowest rate in nine quarters. The economy grew 3.5% in all of 2005 compared with 2004.
Other economic data out Feb. 28 gave the markets food for thought with readings on the housing market, consumer confidence and manufacturing all proving weak.
Giving its second of a total of three GDP readings for each quarter, the Commerce Department said inventory rebuilding by companies accounted for all of the growth in October-December. The fall from the previous quarter reflected lower consumer spending, higher imports, a downturn in federal government spending, and decelerations in equipment, software and in residential fixed investment.
Copyright Agence France-Presse, 2006
