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US growth slows in fourth quarter US growth slows in fourth quarter
(35 minutes later)
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 lower than the 5% growth in the third quarter of last year. 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 2015. 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, according to official figures, putting more money in consumers' pockets and encouraging them to spend. 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.
Ryan Sweet, a senior economist at Moody's Analytics, said: "The consumer did the heavy lifting and I don't think there is any reason to expect that to change in the first half of this year because of the enormous tailwind from lower gasoline prices." 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.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose by 4.3% in the fourth quarter - higher than the 3.2% recorded in 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.