US economy edges up 2%

Washington : US economic growth expanded as expected in the third quarter but not enough to chip away at high unemployment or change perceptions of more monetary easing from the Federal Reserve this week.

Gross domestic product expanded at a two per cent annual rate as consumer spending rose at its quickest pace since 2006 and businesses continued to rebuild inventories, the Commerce Department said yesterday.

The economy expanded at a 1.7 per cent rate in the second quarter and third-quarter growth matched economists' expectations.

"Growth is still positive, but a bit disappointing. It's not where we would like it to be at this point of the recovery," said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

The GDP report probably will not dissuade Fed officials at their Tuesday and Wednesday meeting from announcing a second round of bond purchases this week to push interest rates down further and energise the recovery. But it is likely to colour their debate.

Analysts expect the Fed to announce bond purchases of at least $100 (Dh367) billion a month to push borrowing costs lower and spur businesses to expand investment and hiring.

The economy is experiencing a slow recovery by historical standards, with unemployment at 9.6 per cent and Americans increasingly nervous about the future.

Economists say a growth pace of at least 3.5 per cent is needed to bring down high unemployment.