US economy remains weak despite upward revision

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Falling imports and a smaller-than-expected drop in exports helped the US economy grow by 0.1 per cent during the final three months of 2012, reversing initial estimates of a 0.1 per cent contraction.

However, the rate of growth was the weakest performance in nearly two years and confounded economists’ expectations of a 0.5 per cent gain.

The upward revision by the US commerce department reflected a 4.5 per cent fall in imports, while exports – which have been hit by the ongoing crisis in the eurozone – dipped by 3.9 per cent, well below the previous estimate of a 5.7 per cent decline.

Economists forecast that growth will pick up to an annual pace of about 1.5 per cent in the current quarter, despite higher taxes that have cut take-home pay for most Americans.

Consumer spending, which accounts for about 70 per cent of US output, grew by 2.1 per cent in the three months to December, while housebuilding – one of the economy’s brigher spots – expanded by 17.5 per cent.