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US economy grows 2.5% on buoyant consumer spending US economy grows 2.5% on buoyant consumer spending
(35 minutes later)
The US economy grew by 2.5% in the first three months of the year, supported by the strongest consumer spending figures in two years. The US economy grew at an annualised rate of 2.5% in the first three months of the year, supported by the strongest consumer spending figures in two years.
While the GDP figure was below market expectations for a 3% annualised growth rate, it was considerable better than the 0.4% recorded in the final quarter of last year. While the growth figure was lower than analysts' expectations, it was better than the 0.4% rate recorded in the final quarter of last year.
Consumer spending rose at an annualised rate of 3.2%.Consumer spending rose at an annualised rate of 3.2%.
But government spending fell, led by deep cuts in defence spending. But government spending cuts, particularly in defence, held growth back.
Part of the pick up in growth was due to US farmers filling up grain silos following last year's devastating drought. Removing these inventories, GDP growth was closer to 1.5%.
The figures could renew calls for the Federal Reserve to maintain its monetary stimulus programme of quantitative easing. The central bank meets next week and it is widely predicted that it will stick to its $85bn-a-month bond-buying schedule.