The economy of the United States grew slowly in the fourth quarter although not as significant as predicted earlier. There was slightly strong consumer spending which balanced the drag from measures taken by business owners to cut their inventory overhangs.
The nation's Gross Domestic Product rose at an annual rate of 1.4 percent compared to the previous report of only one 1 percent, stated the Commerce Department on Friday, in the agency's third GDP report.
Moderately strong consumer spending emphasizes the U.S. economy's fundamental strength which should serve to reduce any fear of recession. Such fears spurred a huge stock-market sell-off during the first quarter of 2015.
With the combination of rising inflation and a tight labor market, the Federal Reserve is predicted to finally give in to the temptation of raising interest rates this year.
In a related development a recent report said that last week's filings for U.S. unemployment benefits increased less than the forecast of economists. The numbers of dismissed employees remained consistent with a tight labor market.
Initial jobless claims increased by 6,000 to 265,000 within the period ending on Mar. 19, as indicated in a Labor Department report released Thursday. A Bloomberg survey showed the median forecast of 42 economists was 269,000.
"The consumer is back in the driver's seat," Chris Rupkey said. He is the chief economist at MUFG Union Bank in New York.
"There is no sign of recession in these data, so this will put a smile on Fed officials' faces and argues for their policy of gradual interest-rate normalization to continue," added Rupkey.
Hiring managers are showing their preference in maintaining and building their staff in the face of sustained and even increasing consumer demand. The tight employment condition is also encouraging the nation's economy even with the threat of sluggish economic growth overseas.
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