The US economy bounced back strongly in the spring, to beat analysts' expectations with a growth rate equal to 4% a year.
Gross domestic product in the second of quarter of 2014 grew at a faster rate than the average of 3% predicted by economists. It was a strong comeback from the first three months of the year when the economy shrank by 2.1%, according to the
Despite the good news the economic recovery remains the weakest since the second world war. GDP has grown by just 1% in the first six months of the year. The pick-up in the economy in late 2013 was wiped out by one of the harshest winters on record and even at 4% the pace of recovery remains sluggish.
The figures come as the federal open market committee concluded its latest two-day meeting. The Fed announced another
"Labour market conditions improved, with the unemployment rate declining further. However, a range of labour market indicators suggests that there remains significant underutilisation of labour resources," the Fed said in a statement.
US stock markets reacted calmly to the GDP news and Fed statement. "It shows the Fed is quite coolheaded about the strong GDP reading today," said Thomas Costerg, an economist at
"Overall the Fed remains prudent, but the gap between the hawks and the doves is growing, which might lead to more dissents in future meeting. A rate hike is on the horizon, but the Fed is in no hurry."
The Fed has kept interest rates at close to zero since the end of the financial crisis in 2008.
Analysts added that the GDP figures confirmed the one-off nature of the first quarter data. "We hold to our current view that the economy will expand by 3.0% or so in the back half of the year, interest rates should drift higher and the Federal Reserve will feel vindicated in exiting the asset purchase program,"
On Friday, the
The report found private sector created 218,000 jobs from June to July, the fourth consecutive month of job gains topping 200,000 but lower than the 281,000 jobs added in the last report.
Growth in the first six months of the year, suggesting the US recovery remains at its weakest since the second world war
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