US economic growth slows to 0.6 per cent in Oct-Dec 2007 news
07 March 2008

The US economy grew at an annual rate of just 0.6 per cent in the October-December quarter, slower than the IMF projection of 0.8 per cent for the whole of the current year.

For the whole of 2007 the US economy is estimated to have grown at an overall 2.2 per cent – already the weakest since 2002.

During the July-September quarter, the economy grew at an annual rate of 4.9 per cent.

US economic growth fell sharply in the last three months of 2007, triggered by a slump in building activity, which fell by 16.9 per cent, the biggest fall in 25 years, as housing prices collapsed.

The slowdown is even bigger than the 1.2 per cent annual growth rate predicted by analysts.

The US economy lost 63,000 jobs in February against 22,000 jobs lost in January. The slowdown could cause a further rise in US unemployment as the economy weakens.

The biggest employment declines were seen in the manufacturing, construction and retail sectors, raising fears that the world's biggest economy is sliding into a recession.

The dollar also weakened against the euro to hit a new record low of 1.540 against the euro and to 2.01 against the British pound.

The US currency also fell below to 102 yen for the first time in three years.

Eurozone is holding interest rates even as European firms are finding it harder to sell their relatively expensive goods to the US.

While inflation rate in the eurozone has reached its highest in six years, the ECB has not ruled out a rate cut.

US consumer spending, meanwhile, slipped to a 15-month low in December as financial pressures hit households, official figures show.

The US commerce department said spending inched up 0.2 per cent over the key December shopping period. In November the spending growth rate hit 1 per cent.

The figure is being seen as a further sign of the weakness of the US economy.

The Federal Reserve has already cut interest rates to 3.5 per cent from 4.25 per cent this year in order to boost spending and investment. The central bank is expected to announce a further rate cut after a scheduled meeting of the board.

The US Congress and the Bush administration have also agreed an economic stimulus package, which would add $150 billion in tax rebates to the economy. The measure is still awaiting Senate approval.


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US economic growth slows to 0.6 per cent in Oct-Dec 2007