US economic growth stronger in 2012

Written By Unknown on Rabu, 31 Juli 2013 | 22.24

THE government says the US economy grew at a much faster pace last year than previously estimated. The revised growth figures signal a more sustainable economic recovery and help explain why job growth has accelerated this year.

The economy expanded at a 2.8 per cent annual rate in 2012, up from a previous estimate of 2.2 per cent. Consumers and businesses spent more and governments cut back on their spending less.

The updated growth figures reported on Wednesday by the Commerce Department are part of comprehensive revisions going back several decades.

The upgrade to 2012 growth helps resolve a disparity that has puzzled economists. Hiring picked up late last year and has remained solid this year. The economy has created more than 200,000 jobs a month on average since last fall.

Yet the government had said that economic growth was tepid last year. Faster growth typically drives more hiring. The previously reported growth figures had economists worried that employers would eventually have to slow hiring.

But growth is now closer in line with the job gains, a sign that the more robust hiring may endure.

The revisions are part of comprehensive changes, made roughly every five years, to the nation's gross domestic product. GDP is the broadest measure of the output of goods and services and includes everything from restaurant meals to television production to steel manufacturing. The revisions alter the data all the way back to 1929, though the largest changes were made to the past five years.

Still, the economy's broad trends are roughly the same as before. The government now says the economy shrank 4.3 per cent during the recession, which lasted from December 2007 through June 2009. That's better than the previous estimate of a 4.7 per cent decline. But it still remains the deepest downturn since the Great Depression.

And the recovery is still subpar. The economy expanded 8.2 per cent from June 2009 through the end of last year, up from 7.6 per cent, but still the weakest recovery since World War II.


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