Consumer spending lifts US GDP

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Consumer spending lifts US GDP

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US economic growth edged up as expected in the third quarter but not by enough to reduce high unemployment.

And economists said the Federal Reserve will still have to provide more stimulus.

The US economy turned in a strong performance between January and March growing 3.7 percent, that slowed to 1.7 percent in the second quarter and the first reading for the third quarter was two percent.

The main reason for the sluggish growth is that demand for houses remains weak.

In the third quarter, the government ended stimulus measures designed to encourage people to buy homes.

Also pulling down growth is the fact that the US is importing more than it is exporting. However the trade deficit did narrow somewhat during the quarter.

On the positive side, consumer spending rose at a 2.6 percent rate, its quickest pace since late 2006.

Consumer spending accounts for 70 percent of US economic activity.

The latest growth figures are disappointing to economists who say a growth pace of at least 3.5 percent, driven by solid domestic demand and exports, over several quarters is needed to bring down high unemployment.