US - economy

Strongest economic growth in two years

Article published on the 2009-10-29 Latest update 2009-10-29 16:09 TU

Treasury Secretary Timothy Geithner at the House Financial Services Committee in Washington on 29 October 2009
(Photo: Reuters)

Economic data released in the US on Thursday demonstrated the strongest growth in the last two years. After four consecutive quarters of economic contraction, the country grew at a seasonally adjusted 3.5 per cent in the last quarter.

In figures released by the Commerce Department on Thursday, the US had the strongest expansion since the third quarter of 2007, bringing it to the end of recession.

And their first estimate of third quarter Gross Domestic Product surpassed predictions by most analysts, marking the end of one of the worst downturns since the Great Depression.

World stock markets rallied following the announcement, while the euro breached 1.48 dollars.

However, Treasury Secretary Timothy Geithner admitted that unemployment remains “unacceptably high”. He conceded that despite the data, “the recession remains alive and acute” for many small businesses and families facing foreclosure.

US President Barack Obama also welcomed the announcement but warned that a tough road to recovery lies ahead.

"This is obviously welcome news and an affirmation that this recession is abating and the steps we've taken have made a difference," he said.

"But I also know that we have a long way to go to fully restore our economy and recover from what has been the longest and deepest downturn since the Great Depression."

Household spending helped GDP recover, rising 3.4 percent after a 0.9 per cent drop in the second quarter.

Much of the growth is being attributed to stimulus efforts by the government and it is thought that automobile purchases under the popular "cash-for-clunkers" programme have contributed to the recovery.

But as stimulus efforts subside, many forecasters are expecting weaker figures for quarter four. Unemployment rose to 9.8 per cent in September - a 26-year high - and is likely to slow any revival.