Economy shows unexpected growth

Fed holds steady on interest rates

JOHN M. BERRY, THE WASHINGTON POST

WASHINGTON -- Powered by soaring auto sales and a sharp increase in government spending, the U.S. economy resumed growing in the final three months of last year, albeit at a meager 0.2 percent annual rate, the Commerce Department reported Wednesday.

The unexpectedly strong number, a first estimate that will be revised in coming months, suggests that the U.S. recession that began last spring might have already ended. If so, it will have been the mildest on record.

The growth figure also could raise more questions about whether the economic stimulus package being debated on Capitol Hill will be needed.

With the prospects for an economic rebound improving steadily, Federal Reserve officials meeting Wednesday decided not to cut their extraordinarily low target for overnight interest rates. It was the first meeting since the beginning of last year at which the target was not reduced.

"Signs that weakness in demand is abating and economic activity is beginning to firm have become more prevalent," the Federal Open Market Committee, the policymaking group, said in a statement announcing its decision.

However, the FOMC said the strength of business and household spending in coming months "is still uncertain," and that therefore it regards the risks still facing the economy as "weighted mainly toward conditions that may generate economic weakness in the foreseeable future."

The Olympian Copyright 2002

back to main Home Page Stories index