US exits recession

WASHINGTON – THE US economy exited recession in the third quarter, posting the strongest growth in two years, according to government data released on Thursday.

After four quarters of contraction, the economy grew at an annualized 3.5 per cent in the July-September period from the prior quarter, the Commerce Department reported.

It was strongest expansion since the 2007 third quarter, when a US subprime mortgage crisis triggered a global financial crisis that hammered the world economy.

The department’s first estimate of third-quarter gross domestic product (GDP), the broadest measure of the output of goods and services in the world’s largest economy, was much better than the 3.2 per cent rate expected by most analysts.

The department said the economy shrank an unrevised 0.7 per cent in the second quarter. The third-quarter increase was led by a rise in consumer spending, up 3.4 per cent, adding 2.36 percentage points to GDP growth.

Consumer spending, which accounts for two-thirds of US economic activity, ground to a halt in the second half of 2008 as the financial crisis accelerated after Wall Street investment bank Lehman Brothers failed. — AFP