Upbeat Consumers Propel U.S. Fourth-Quarter Growth: Economy

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Bloomberg News

American households picked up spending in the fourth quarter and remained confident in early 2015, indicating the economy is poised to overcome any bumps caused by slower global demand.

The biggest gain in consumer purchases in four years helped gross domestic product expand at a 2.2 percent annualized rate at the end of 2014, although that was less than previously estimated, according to Commerce Department data issued Friday in Washington. Other reports showed household sentiment held close to an 11-year high, manufacturing in the Chicago area shrank and more people signed contracts to buy a home.

An improving job market and genrally cheaper fuel probably will help sustain consumer spending, which accounts for almost 70 percent of the economy. That will be critical in supporting the expansion as the lingering effects of the work stoppage at West Coast ports and harsh winter weather, combined with a rising dollar and slower growth among trading partners, hold back American factories.

“The consumer looks relatively solid,” said Michael Carey, chief economist for North America at Credit Agricole CIB in New York. “We’re looking at an increase in domestic demand, which is good because we’re one of the few economies out there that is growing relatively strongly.”

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