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US growth slows in fourth quarter | US growth slows in fourth quarter |
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The world's largest economy expanded less than expected in the final three months of 2014 despite lower fuel prices boosting consumer confidence. | The world's largest economy expanded less than expected in the final three months of 2014 despite lower fuel prices boosting consumer confidence. |
The US posted annualised growth of 2.6% for the fourth quarter - lower than the 3% projected by economists. | The US posted annualised growth of 2.6% for the fourth quarter - lower than the 3% projected by economists. |
The figure was weaker than the 5% growth in the third quarter of 2014. | |
However, the dramatic slide in fuel prices in recent months is expected to result in higher growth for the first three months of this year. | |
Petrol prices have fallen by 43% since June in the US, according to official figures, putting more money in consumers' pockets and encouraging them to spend. | |
Consumer spending, which accounts for more than two-thirds of US economic activity, rose by 4.3% in the fourth quarter - the fastest rise in nearly nine years - and higher than the 3.2% for the third quarter. | |
Fuel savings | |
Mark Zandi, chief economist at Moody's Analytics, said: "It took us a while to get here, but I think the economy is finally off and running. | |
"We are seeing a number of positive developments. Businesses are hiring aggressively and the big drop in gas prices means that people have more money to spend on other items." | |
The near-60% slide in oil prices in the plast seven months has cut the price of petrol to about $2 per gallon, or the equivalent of £1.32 for 4.5 litres. That is little more than British drivers pay for just one litre of petrol. | |
The fall has saved Americans about $175bn, Mr Zandi said: "A big part of growth this year will be people spending their gas savings." | |
For 2014 as a whole, the economy expanded by 2.4% - better than the 2.2% for the previous 12 months. | |
The report came two days after the Federal Reserve said the US economy was expanding at a "solid pace", which indicated that it was still prepared to raise interest rates later this year. | |
The main rate has been held at close to zero since December 2008 and most economists expect the central bank to finally raise it in mid-2015. |