Washington:
The US economy grew at a stronger pace in the final
quarter of 2006 without raising inflation pressures, as
robust consumer spending more than offset the biggest
slump in housing in 15 years.
The
Federal Reserve policy-makers' have decided to keep the
benchmark overnight federal funds rate steady at 5.25
per cent, while again warning about the risks of inflation.
It has also pointed to some signs of a stabilising housing
market.
US
gross domestic product expanded at a 3.5-per cent annual
rate during the October-December quarter, the US commerce
department revealed. The rise in GDP was at its quarterly
best since the beginning of last year, when the slide
in the US housing market was not yet fully evident. It
also was at a healthier pace than the annual growth rate
of 3 per cent that economists were expecting.
However,
Spending on new home building slid at a rate of 19.2 per
cent during the quarter, as the housing market continued
to weaken and by 4.2 per cent for all of 2006. These were
both the largest declines, respectively, since 1991.
The
National Association of Purchasing Management, Chicago
index was at 48.8 well below expectations and an
indication of economic business contraction the region.
There
were, though, some signs of weakness in the report
business investment during the quarter fell 0.4 per cent,
breaking a streak of 14 consecutive quarterly increases,
though consumer spending advanced at 4.4 per cent rate
in the fourth quarter.
Inflation
moved ahead at just a 2.1-per cent rate, down from the
2.2 per cent in the previous quarter, but still slightly
above the comfort range of the Fed.
GDP
growth for the full year grew 3.4 per cent after a 3.2
per cent gain in 2005.
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