The US economy grew at a much faster rate than initially thought during the fourth quarter of 2001, logging the strongest quarterly gain for the year and supporting the belief the US economy is turning the corner to recovery, according to the latest government report today.
Gross domestic product, the broadest gauge of the economy's health, expanded at a revised 1.4% rate in the final three months of last year, seven times the 0.2% pace first estimated, the Commerce Department said.
The sharp revision supports Federal Reserve Chairman Alan Greenspan's contention yesterday that the US recession was ending. Economists had expected GDP to grow by 0.8% during the quarter.
Even though the economy has been officially in recession since last March, the downturn has been unusually mild by historical standards. The only negative quarter for GDP occurred in the third quarter, when it contracted 1.3%.
A jump in government spending and a rush by consumers to take advantage of zero-percent financing for purchases of new cars powered the fourth-quarter GDP. And amid the strong consumer spending, companies ran through $120 billion worth of inventories.
* Business activity in the US midwest expanded in February for the first time in 19 months, according to the latest index from the Chicago Purchasing Management Association.
The association's business barometer advanced to a seasonally adjusted 53.1 points in February from 45.1 in January, beating Wall Street's forecast for a rise to 47.
It was the first reading above 50 points - the theoretical dividing point between expansion and contraction - since July 2000 and the highest reading since June 2000.
The Chicago survey is closely watched as a pointer to the larger national survey released by the Institute for Supply Management, which will be released tomorrow.
The Chicago survey's main indices improved across the board. The new orders index rose to 59.5 in February - the highest level since April 2000 - from 48.7 in the previous month.
The prices paid index advanced to 51.2, the highest level since May last year, from 40.7. The supplier deliveries index climbed to 46.4 points from 43.9. The employment index rose to 36.3 points from 23.2.
